Correlation Between Flaherty Crumrine and John Hancock
Can any of the company-specific risk be diversified away by investing in both Flaherty Crumrine 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 Flaherty Crumrine and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flaherty Crumrine Preferred and John Hancock Premium, you can compare the effects of market volatilities on Flaherty Crumrine 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 Flaherty Crumrine with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flaherty Crumrine and John Hancock.
Diversification Opportunities for Flaherty Crumrine and John Hancock
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flaherty and John is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferred and John Hancock Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Premium and Flaherty Crumrine 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 Flaherty Crumrine Preferred 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 Premium has no effect on the direction of Flaherty Crumrine i.e., Flaherty Crumrine and John Hancock go up and down completely randomly.
Pair Corralation between Flaherty Crumrine and John Hancock
Considering the 90-day investment horizon Flaherty Crumrine is expected to generate 1.64 times less return on investment than John Hancock. But when comparing it to its historical volatility, Flaherty Crumrine Preferred is 1.26 times less risky than John Hancock. It trades about 0.12 of its potential returns per unit of risk. John Hancock Premium is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,105 in John Hancock Premium on August 29, 2024 and sell it today you would earn a total of 195.00 from holding John Hancock Premium or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flaherty Crumrine Preferred vs. John Hancock Premium
Performance |
| Timeline |
| Flaherty Crumrine |
| John Hancock Premium |
Flaherty Crumrine and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flaherty Crumrine and John Hancock
The main advantage of trading using opposite Flaherty Crumrine and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty Crumrine 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.| Flaherty Crumrine vs. Flaherty Crumrine Total | Flaherty Crumrine vs. Flaherty Crumrine Preferred | Flaherty Crumrine vs. John Hancock Preferred | Flaherty Crumrine vs. Flaherty and Crumrine |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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