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 Preferredome and John Hancock Preferred, 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
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flaherty and John is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferredome 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 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 Preferredome 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 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 Preferredome is expected to generate 0.83 times more return on investment than John Hancock. However, Flaherty Crumrine Preferredome is 1.2 times less risky than John Hancock. It trades about 0.14 of its potential returns per unit of risk. John Hancock Preferred is currently generating about 0.04 per unit of risk. If you would invest 1,009 in Flaherty Crumrine Preferredome on September 2, 2024 and sell it today you would earn a total of 130.00 from holding Flaherty Crumrine Preferredome or generate 12.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flaherty Crumrine Preferredome vs. John Hancock Preferred
Performance |
| Timeline |
| Flaherty Crumrine |
| John Hancock Preferred |
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 Preferred | Flaherty Crumrine vs. Flaherty Crumrine Preferred | Flaherty Crumrine vs. Flaherty Crumrine Total | Flaherty Crumrine vs. Putnam Master Intermediate |
| John Hancock vs. John Hancock Preferred | John Hancock vs. John Hancock Tax | John Hancock vs. John Hancock Premium | John Hancock vs. Cohen Steers Tax Advantaged |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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