Correlation Between Amg River and J Hancock

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

By analyzing existing cross correlation between Amg River Road and J Hancock Ii, you can compare the effects of market volatilities on Amg River and J 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 Amg River with a short position of J Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and J Hancock.

Diversification Opportunities for Amg River and J Hancock

0.81

Correlation Coefficient

Amg River  J Hancock

Very poor diversification

The 3 months correlation between Amg and JRODX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and J Hancock Ii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Hancock Ii and Amg River 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 Amg River Road are associated (or correlated) with J Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Hancock Ii has no effect on the direction of Amg River i.e., Amg River and J Hancock go up and down completely randomly.

Pair Corralation between Amg River and J Hancock

Assuming the 90 days horizon Amg River is expected to generate 1.23 times less return on investment than J Hancock. In addition to that, Amg River is 1.31 times more volatile than J Hancock Ii. It trades about 0.06 of its total potential returns per unit of risk. J Hancock Ii is currently generating about 0.1 per unit of volatility. If you would invest  1,182  in J Hancock Ii on September 12, 2024 and sell it today you would earn a total of  501.00  from holding J Hancock Ii or generate 42.39% return on investment over 90 days.

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

Amg River Road  vs.  J Hancock Ii

Amg River Road

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amg River Road are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amg River showed solid returns over the last few months and may actually be approaching a breakup point.

J Hancock Ii

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in J Hancock Ii are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, J 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 Amg River and J Hancock

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

The idea behind Amg River Road and J Hancock Ii 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.