Correlation Between Jhancock Diversified and Rational Defensive

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Can any of the company-specific risk be diversified away by investing in both Jhancock Diversified and Rational Defensive 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 Rational Defensive 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 Rational Defensive Growth, you can compare the effects of market volatilities on Jhancock Diversified and Rational Defensive 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 Rational Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Diversified and Rational Defensive.

Diversification Opportunities for Jhancock Diversified and Rational Defensive

JhancockRationalDiversified AwayJhancockRationalDiversified Away100%
0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Jhancock and Rational is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Diversified Macro and Rational Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Defensive Growth 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 Rational Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Defensive Growth has no effect on the direction of Jhancock Diversified i.e., Jhancock Diversified and Rational Defensive go up and down completely randomly.

Pair Corralation between Jhancock Diversified and Rational Defensive

Assuming the 90 days horizon Jhancock Diversified is expected to generate 8.73 times less return on investment than Rational Defensive. But when comparing it to its historical volatility, Jhancock Diversified Macro is 1.57 times less risky than Rational Defensive. It trades about 0.04 of its potential returns per unit of risk. Rational Defensive Growth is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,630  in Rational Defensive Growth on September 18, 2024 and sell it today you would earn a total of  509.00  from holding Rational Defensive Growth or generate 14.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jhancock Diversified Macro  vs.  Rational Defensive Growth

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 051015
JavaScript chart by amCharts 3.21.15JDJRX HSUAX
       Timeline  
Jhancock Diversified 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Jhancock Diversified Macro are ranked lower than 3 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec8.858.98.9599.059.19.15
Rational Defensive Growth 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Defensive showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec3738394041

Jhancock Diversified and Rational Defensive Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.71-1.27-0.83-0.390.0073350.40.841.281.722.16 0.20.40.60.81.01.21.4
JavaScript chart by amCharts 3.21.15JDJRX HSUAX
       Returns  

Pair Trading with Jhancock Diversified and Rational Defensive

The main advantage of trading using opposite Jhancock Diversified and Rational Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock Diversified position performs unexpectedly, Rational Defensive 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 Rational Defensive will offset losses from the drop in Rational Defensive's long position.
The idea behind Jhancock Diversified Macro and Rational Defensive Growth 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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