Correlation Between Jhancock Diversified and Diamond Hill

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

By analyzing existing cross correlation between Jhancock Diversified Macro and Diamond Hill Large, you can compare the effects of market volatilities on Jhancock Diversified and Diamond Hill 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 Diversified with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Diversified and Diamond Hill.

Diversification Opportunities for Jhancock Diversified and Diamond Hill

-0.67

Correlation Coefficient

Jhancock Diversified  Diamond Hill

Excellent diversification

The 3 months correlation between Jhancock and Diamond is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Diversified Macro and Diamond Hill Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Large and Jhancock Diversified 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 Diversified Macro are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Large has no effect on the direction of Jhancock Diversified i.e., Jhancock Diversified and Diamond Hill go up and down completely randomly.

Pair Corralation between Jhancock Diversified and Diamond Hill

Assuming the 90 days horizon Jhancock Diversified Macro is expected to generate 0.77 times more return on investment than Diamond Hill. However, Jhancock Diversified Macro is 1.3 times less risky than Diamond Hill. It trades about 0.37 of its potential returns per unit of risk. Diamond Hill Large is currently generating about 0.22 per unit of risk. If you would invest  902.00  in Jhancock Diversified Macro on October 23, 2024 and sell it today you would earn a total of  28.00  from holding Jhancock Diversified Macro or generate 3.1% return on investment over 90 days.

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

Jhancock Diversified Macro  vs.  Diamond Hill Large

Jhancock Diversified

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jhancock Diversified Macro are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jhancock Diversified is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Diamond Hill Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Hill Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Diamond Hill 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 Diversified and Diamond Hill

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

The idea behind Jhancock Diversified Macro and Diamond Hill Large 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.