Correlation Between Tekla Life and John Hancock
Can any of the company-specific risk be diversified away by investing in both Tekla Life 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 Tekla Life and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tekla Life Sciences and John Hancock Preferred, you can compare the effects of market volatilities on Tekla Life 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 Tekla Life with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Life and John Hancock.
Diversification Opportunities for Tekla Life and John Hancock
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tekla and John is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Life Sciences 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 Tekla Life 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 Tekla Life Sciences 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 Tekla Life i.e., Tekla Life and John Hancock go up and down completely randomly.
Pair Corralation between Tekla Life and John Hancock
Considering the 90-day investment horizon Tekla Life Sciences is expected to generate 2.23 times more return on investment than John Hancock. However, Tekla Life is 2.23 times more volatile than John Hancock Preferred. It trades about -0.1 of its potential returns per unit of risk. John Hancock Preferred is currently generating about -0.25 per unit of risk. If you would invest 1,472 in Tekla Life Sciences on September 12, 2024 and sell it today you would lose (54.41) from holding Tekla Life Sciences or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tekla Life Sciences vs. John Hancock Preferred
Performance |
| Timeline |
| Tekla Life Sciences |
| John Hancock Preferred |
Tekla Life and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Life and John Hancock
The main advantage of trading using opposite Tekla Life and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Life 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.| Tekla Life vs. Tekla World Healthcare | Tekla Life vs. Tekla Healthcare Opportunities | Tekla Life vs. Royce Value Closed | Tekla Life vs. John Hancock Financial |
| John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Premium | John Hancock vs. Flaherty Crumrine Preferred | John Hancock vs. John Hancock Tax |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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