Correlation Between John Hancock and Freedom Day

Can any of the company-specific risk be diversified away by investing in both John Hancock and Freedom Day 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 Day into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between John Hancock Multifactor and Freedom Day Dividend, you can compare the effects of market volatilities on John Hancock and Freedom Day 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 Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Freedom Day.

Diversification Opportunities for John Hancock and Freedom Day

0.87

Correlation Coefficient

John Hancock  Freedom Day

Very poor diversification

The 3 months correlation between John and Freedom is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Multifactor and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Multifactor are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of John Hancock i.e., John Hancock and Freedom Day go up and down completely randomly.

Pair Corralation between John Hancock and Freedom Day

Given the investment horizon of 90 days John Hancock Multifactor is expected to generate 1.19 times more return on investment than Freedom Day. However, John Hancock is 1.19 times more volatile than Freedom Day Dividend. It trades about 0.0 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about -0.19 per unit of risk. If you would invest  2,596  in John Hancock Multifactor on January 29, 2024 and sell it today you would lose (3.00) from holding John Hancock Multifactor or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

John Hancock Multifactor  vs.  Freedom Day Dividend

John Hancock Multifactor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Multifactor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, John Hancock is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Freedom Day Dividend

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Freedom Day may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with John Hancock and Freedom Day

The main advantage of trading using opposite John Hancock and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Freedom Day 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 Day will offset losses from the drop in Freedom Day's long position.

The idea behind John Hancock Multifactor and Freedom Day Dividend pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..