Correlation Between J Hancock and Equity Income

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

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

Diversification Opportunities for J Hancock and Equity Income

0.53

Correlation Coefficient

J Hancock  Equity Income

Very weak diversification

The 3 months correlation between JRODX and Equity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding J Hancock Ii and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income and J Hancock 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 J Hancock Ii 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 J Hancock i.e., J Hancock and Equity Income go up and down completely randomly.

Pair Corralation between J Hancock and Equity Income

Assuming the 90 days horizon J Hancock Ii is expected to generate 0.66 times more return on investment than Equity Income. However, J Hancock Ii is 1.52 times less risky than Equity Income. It trades about -0.06 of its potential returns per unit of risk. Equity Income Fund is currently generating about -0.13 per unit of risk. If you would invest  1,658  in J Hancock Ii on December 4, 2024 and sell it today you would lose (47.00) from holding J Hancock Ii or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

J Hancock Ii  vs.  Equity Income Fund

J Hancock Ii

Risk-Adjusted Performance

Very Weak

Over the last 90 days J Hancock Ii has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, J Hancock 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

Very Weak

Over the last 90 days Equity Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with J Hancock and Equity Income

The main advantage of trading using opposite J Hancock and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Hancock 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 J Hancock Ii 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.