Correlation Between Jhancock Disciplined and Great West

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

By analyzing existing cross correlation between Jhancock Disciplined Value and Great West Moderately Aggressive, you can compare the effects of market volatilities on Jhancock Disciplined and Great West 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 Disciplined with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Disciplined and Great West.

Diversification Opportunities for Jhancock Disciplined and Great West

0.7

Correlation Coefficient

Jhancock Disciplined  Great West

Poor diversification

The 3 months correlation between Jhancock and Great is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Disciplined Value and Great West Moderately Aggressi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Moderately and Jhancock Disciplined 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 Disciplined Value are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Moderately has no effect on the direction of Jhancock Disciplined i.e., Jhancock Disciplined and Great West go up and down completely randomly.

Pair Corralation between Jhancock Disciplined and Great West

Assuming the 90 days horizon Jhancock Disciplined Value is expected to generate 1.92 times more return on investment than Great West. However, Jhancock Disciplined is 1.92 times more volatile than Great West Moderately Aggressive. It trades about 0.09 of its potential returns per unit of risk. Great West Moderately Aggressive is currently generating about 0.06 per unit of risk. If you would invest  2,539  in Jhancock Disciplined Value on September 18, 2024 and sell it today you would earn a total of  111.00  from holding Jhancock Disciplined Value or generate 4.37% return on investment over 90 days.

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

Jhancock Disciplined Value  vs.  Great West Moderately Aggressi

Jhancock Disciplined

Risk-Adjusted Performance

7 of 100

OK

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

Great West Moderately

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Moderately Aggressive are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great West 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 Disciplined and Great West

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

The idea behind Jhancock Disciplined Value and Great West Moderately Aggressive 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.