Correlation Between Prudential California and John Hancock

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

By analyzing existing cross correlation between Prudential California Muni and John Hancock Strategic, you can compare the effects of market volatilities on Prudential California 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 Prudential California with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and John Hancock.

Diversification Opportunities for Prudential California and John Hancock

0.63

Correlation Coefficient

Prudential California  John Hancock

Poor diversification

The 3 months correlation between Prudential and John is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and John Hancock Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Strategic and Prudential California 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 Prudential California Muni 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 Strategic has no effect on the direction of Prudential California i.e., Prudential California and John Hancock go up and down completely randomly.

Pair Corralation between Prudential California and John Hancock

Assuming the 90 days horizon Prudential California is expected to generate 8.15 times less return on investment than John Hancock. But when comparing it to its historical volatility, Prudential California Muni is 7.48 times less risky than John Hancock. It trades about 0.23 of its potential returns per unit of risk. John Hancock Strategic is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,415  in John Hancock Strategic on May 13, 2025 and sell it today you would earn a total of  297.00  from holding John Hancock Strategic or generate 12.3% return on investment over 90 days.

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

Prudential California Muni  vs.  John Hancock Strategic

Prudential California

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential California Muni are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Strategic are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, John Hancock may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Prudential California and John Hancock

The main advantage of trading using opposite Prudential California and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential California 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.

The idea behind Prudential California Muni and John Hancock Strategic 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.