Correlation Between Intermediate Term and John Hancock

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

By analyzing existing cross correlation between Intermediate Term Tax Free Bond and John Hancock Municipal, you can compare the effects of market volatilities on Intermediate Term 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 Intermediate Term with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Term and John Hancock.

Diversification Opportunities for Intermediate Term and John Hancock

0.83

Correlation Coefficient

Intermediate Term  John Hancock

Very poor diversification

The 3 months correlation between Intermediate and John is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Tax Free Bon and John Hancock Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Municipal and Intermediate Term 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 Intermediate Term Tax Free Bond 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 Municipal has no effect on the direction of Intermediate Term i.e., Intermediate Term and John Hancock go up and down completely randomly.

Pair Corralation between Intermediate Term and John Hancock

Assuming the 90 days horizon Intermediate Term is expected to generate 1.74 times less return on investment than John Hancock. In addition to that, Intermediate Term is 1.2 times more volatile than John Hancock Municipal. It trades about 0.11 of its total potential returns per unit of risk. John Hancock Municipal is currently generating about 0.22 per unit of volatility. If you would invest  993.00  in John Hancock Municipal on May 4, 2025 and sell it today you would earn a total of  15.00  from holding John Hancock Municipal or generate 1.51% return on investment over 90 days.

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

Intermediate Term Tax Free Bon  vs.  John Hancock Municipal

Intermediate Term Tax

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Term Tax Free Bond are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Intermediate Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

John Hancock Municipal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Municipal are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, John Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intermediate Term and John Hancock

The main advantage of trading using opposite Intermediate Term and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Term 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 Intermediate Term Tax Free Bond and John Hancock Municipal 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.