Correlation Between First Trust and John Hancock
Can any of the company-specific risk be diversified away by investing in both First Trust and John Hancock at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Trust and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and John Hancock Income, you can compare the effects of market volatilities on First Trust and John Hancock and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Trust with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and John Hancock.
Diversification Opportunities for First Trust and John Hancock
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and John is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and John Hancock Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Income and First Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Trust Senior are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Income has no effect on the direction of First Trust i.e., First Trust and John Hancock go up and down completely randomly.
Pair Corralation between First Trust and John Hancock
Considering the 90-day investment horizon First Trust Senior is expected to generate 1.28 times more return on investment than John Hancock. However, First Trust is 1.28 times more volatile than John Hancock Income. It trades about 0.09 of its potential returns per unit of risk. John Hancock Income is currently generating about -0.06 per unit of risk. If you would invest 1,009 in First Trust Senior on August 29, 2024 and sell it today you would earn a total of 29.00 from holding First Trust Senior or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. John Hancock Income
Performance |
| Timeline |
| First Trust Senior |
| John Hancock Income |
First Trust and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and John Hancock
The main advantage of trading using opposite First Trust and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, John Hancock can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in John Hancock will offset losses from the drop in John Hancock's long position.| First Trust vs. Eaton Vance National | First Trust vs. Invesco High Income | First Trust vs. Blackrock Muniholdings Ny | First Trust vs. Nuveen California Select |
| John Hancock vs. MFS High Income | John Hancock vs. MFS Investment Grade | John Hancock vs. Blackrock Muniholdings Closed | John Hancock vs. Eaton Vance National |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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