Correlation Between John Hancock and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both John Hancock and Freedom Bank 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 Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Investors and Freedom Bank of, you can compare the effects of market volatilities on John Hancock and Freedom Bank 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 Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Freedom Bank.
Diversification Opportunities for John Hancock and Freedom Bank
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between John and Freedom is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Investors and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank 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 Investors are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of John Hancock i.e., John Hancock and Freedom Bank go up and down completely randomly.
Pair Corralation between John Hancock and Freedom Bank
Considering the 90-day investment horizon John Hancock Investors is expected to under-perform the Freedom Bank. But the stock apears to be less risky and, when comparing its historical volatility, John Hancock Investors is 1.28 times less risky than Freedom Bank. The stock trades about -0.07 of its potential returns per unit of risk. The Freedom Bank of is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,076 in Freedom Bank of on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Freedom Bank of or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
John Hancock Investors vs. Freedom Bank of
Performance |
| Timeline |
| John Hancock Investors |
| Freedom Bank |
John Hancock and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Freedom Bank
The main advantage of trading using opposite John Hancock and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| John Hancock vs. DTF Tax Free | John Hancock vs. MFS Investment Grade | John Hancock vs. Eaton Vance National | John Hancock vs. Nuveen California Select |
| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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