Correlation Between Fundamental Large and J Hancock
Can any of the company-specific risk be diversified away by investing in both Fundamental Large 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 Fundamental Large and J Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Large Cap and J Hancock Ii, you can compare the effects of market volatilities on Fundamental Large 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 Fundamental Large with a short position of J Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and J Hancock.
Diversification Opportunities for Fundamental Large and J Hancock
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fundamental and JRETX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large 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 Fundamental Large 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 Fundamental Large 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 Fundamental Large i.e., Fundamental Large and J Hancock go up and down completely randomly.
Pair Corralation between Fundamental Large and J Hancock
Assuming the 90 days horizon Fundamental Large is expected to generate 1.25 times less return on investment than J Hancock. In addition to that, Fundamental Large is 1.45 times more volatile than J Hancock Ii. It trades about 0.05 of its total potential returns per unit of risk. J Hancock Ii is currently generating about 0.09 per unit of volatility. If you would invest 1,040 in J Hancock Ii on September 25, 2024 and sell it today you would earn a total of 384.00 from holding J Hancock Ii or generate 36.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.8% |
Values | Daily Returns |
Fundamental Large Cap vs. J Hancock Ii
Performance |
Timeline |
Fundamental Large Cap |
J Hancock Ii |
Fundamental Large and J Hancock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fundamental Large and J Hancock
The main advantage of trading using opposite Fundamental Large and J Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large 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.Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Multimanager Lifestyle Moderate | Fundamental Large vs. Multimanager Lifestyle Balanced |
J Hancock vs. Regional Bank Fund | J Hancock vs. Regional Bank Fund | J Hancock vs. Multimanager Lifestyle Moderate | J Hancock vs. Multimanager Lifestyle Balanced |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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