Correlation Between Jhancock Multi-index and Equity Income

Can any of the company-specific risk be diversified away by investing in both Jhancock Multi-index and Equity Income 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 Jhancock Multi-index and Equity Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jhancock Multi Index 2065 and Equity Income Fund, you can compare the effects of market volatilities on Jhancock Multi-index and Equity Income 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 Jhancock Multi-index with a short position of Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Multi-index and Equity Income.

Diversification Opportunities for Jhancock Multi-index and Equity Income

0.5

Correlation Coefficient

Jhancock Multi-index  Equity Income

Very weak diversification

The 3 months correlation between Jhancock and Equity is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Multi Index 2065 and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income and Jhancock Multi-index 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 Jhancock Multi Index 2065 are associated (or correlated) with Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Jhancock Multi-index i.e., Jhancock Multi-index and Equity Income go up and down completely randomly.

Pair Corralation between Jhancock Multi-index and Equity Income

Assuming the 90 days horizon Jhancock Multi Index 2065 is expected to under-perform the Equity Income. In addition to that, Jhancock Multi-index is 1.22 times more volatile than Equity Income Fund. It trades about -0.03 of its total potential returns per unit of risk. Equity Income Fund is currently generating about 0.1 per unit of volatility. If you would invest  1,860  in Equity Income Fund on December 29, 2024 and sell it today you would earn a total of  78.00  from holding Equity Income Fund or generate 4.19% return on investment over 90 days.

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

Jhancock Multi Index 2065  vs.  Equity Income Fund

Jhancock Multi Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jhancock Multi Index 2065 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Jhancock Multi-index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Equity Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Income Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Equity Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jhancock Multi-index and Equity Income

The main advantage of trading using opposite Jhancock Multi-index and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock Multi-index position performs unexpectedly, Equity Income 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 Equity Income will offset losses from the drop in Equity Income's long position.

The idea behind Jhancock Multi Index 2065 and Equity Income Fund 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.