Correlation Between John Hancock and Wells Fargo

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Can any of the company-specific risk be diversified away by investing in both John Hancock and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Tax Advantaged and Wells Fargo, you can compare the effects of market volatilities on John Hancock and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Wells Fargo.

Diversification Opportunities for John Hancock and Wells Fargo

0.87
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between John Hancock and Wells Fargo

Considering the 90-day investment horizon John Hancock is expected to generate 1.16 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, John Hancock Tax Advantaged is 1.34 times less risky than Wells Fargo. It trades about 0.3 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  5,481  in Wells Fargo on December 29, 2023 and sell it today you would earn a total of  280.00  from holding Wells Fargo or generate 5.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

John Hancock Tax-Advantaged  vs.  Wells Fargo

 Performance 
       Timeline  
John Hancock Tax-adv 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Tax Advantaged are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, John Hancock is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Wells Fargo 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Wells Fargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

John Hancock and Wells Fargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with John Hancock and Wells Fargo

The main advantage of trading using opposite John Hancock and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.
The idea behind John Hancock Tax Advantaged and Wells Fargo 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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