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 Preferred and John Hancock Preferred, 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
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and John is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Preferred and John Hancock Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Preferred 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 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 Preferred 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 is expected to generate 1.5 times less return on investment than John Hancock. But when comparing it to its historical volatility, First Trust Preferred is 1.23 times less risky than John Hancock. It trades about 0.11 of its potential returns per unit of risk. John Hancock Preferred is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,251 in John Hancock Preferred on August 30, 2024 and sell it today you would earn a total of 52.00 from holding John Hancock Preferred or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Preferred vs. John Hancock Preferred
Performance |
| Timeline |
| First Trust Preferred |
| John Hancock Preferred |
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. Invesco Variable Rate | First Trust vs. VanEck Preferred Securities | First Trust vs. First Trust Tactical | First Trust vs. First Trust Senior |
| John Hancock vs. American Century ETF | John Hancock vs. Principal Spectrum Preferred | John Hancock vs. Fidelity Preferred Securities | John Hancock vs. Innovator SP Investment |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |