Correlation Between John Hancock and Flaherty Crumrine
Can any of the company-specific risk be diversified away by investing in both John Hancock and Flaherty Crumrine 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 John Hancock and Flaherty Crumrine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Preferred and Flaherty Crumrine Preferred, you can compare the effects of market volatilities on John Hancock and Flaherty Crumrine 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 John Hancock with a short position of Flaherty Crumrine. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Flaherty Crumrine.
Diversification Opportunities for John Hancock and Flaherty Crumrine
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Flaherty is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Preferred and Flaherty Crumrine Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty Crumrine and John Hancock 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 John Hancock Preferred are associated (or correlated) with Flaherty Crumrine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty Crumrine has no effect on the direction of John Hancock i.e., John Hancock and Flaherty Crumrine go up and down completely randomly.
Pair Corralation between John Hancock and Flaherty Crumrine
Considering the 90-day investment horizon John Hancock Preferred is expected to generate 1.23 times more return on investment than Flaherty Crumrine. However, John Hancock is 1.23 times more volatile than Flaherty Crumrine Preferred. It trades about 0.09 of its potential returns per unit of risk. Flaherty Crumrine Preferred is currently generating about 0.09 per unit of risk. If you would invest 1,316 in John Hancock Preferred on August 31, 2024 and sell it today you would earn a total of 449.00 from holding John Hancock Preferred or generate 34.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Preferred vs. Flaherty Crumrine Preferred
Performance |
| Timeline |
| John Hancock Preferred |
| Flaherty Crumrine |
John Hancock and Flaherty Crumrine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Flaherty Crumrine
The main advantage of trading using opposite John Hancock and Flaherty Crumrine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Flaherty Crumrine 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 Flaherty Crumrine will offset losses from the drop in Flaherty Crumrine's long position.| John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Premium | John Hancock vs. John Hancock Tax |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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