Correlation Between Columbia Small and J Hancock

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

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

Diversification Opportunities for Columbia Small and J Hancock

0.73

Correlation Coefficient

Columbia Small  J Hancock

Poor diversification

The 3 months correlation between Columbia and JRODX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap 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 Columbia Small 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 Columbia Small Cap 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 Columbia Small i.e., Columbia Small and J Hancock go up and down completely randomly.

Pair Corralation between Columbia Small and J Hancock

Assuming the 90 days horizon Columbia Small Cap is expected to generate 1.8 times more return on investment than J Hancock. However, Columbia Small is 1.8 times more volatile than J Hancock Ii. It trades about 0.12 of its potential returns per unit of risk. J Hancock Ii is currently generating about 0.09 per unit of risk. If you would invest  5,315  in Columbia Small Cap on August 30, 2024 and sell it today you would earn a total of  477.00  from holding Columbia Small Cap or generate 8.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Columbia Small Cap  vs.  J Hancock Ii

Columbia Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.

J Hancock Ii

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J Hancock Ii are ranked lower than 7 (%) 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 Columbia Small and J Hancock

The main advantage of trading using opposite Columbia Small and J Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Small 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 Columbia Small Cap 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.