Correlation Between J Hancock and Lifestyle

Can any of the company-specific risk be diversified away by investing in both J Hancock and Lifestyle 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 Lifestyle 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 Lifestyle Ii Moderate, you can compare the effects of market volatilities on J Hancock and Lifestyle 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 Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Hancock and Lifestyle.

Diversification Opportunities for J Hancock and Lifestyle

0.58

Correlation Coefficient

J Hancock  Lifestyle

Very weak diversification

The 3 months correlation between JROUX and Lifestyle is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding J Hancock Ii and Lifestyle Ii Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Moderate 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 Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Moderate has no effect on the direction of J Hancock i.e., J Hancock and Lifestyle go up and down completely randomly.

Pair Corralation between J Hancock and Lifestyle

Assuming the 90 days horizon J Hancock Ii is expected to under-perform the Lifestyle. In addition to that, J Hancock is 2.29 times more volatile than Lifestyle Ii Moderate. It trades about -0.03 of its total potential returns per unit of risk. Lifestyle Ii Moderate is currently generating about 0.04 per unit of volatility. If you would invest  1,082  in Lifestyle Ii Moderate on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Lifestyle Ii Moderate or generate 0.92% return on investment over 90 days.

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

J Hancock Ii  vs.  Lifestyle Ii Moderate

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 basic indicators, J Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lifestyle Ii Moderate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifestyle Ii Moderate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with J Hancock and Lifestyle

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

The idea behind J Hancock Ii and Lifestyle Ii Moderate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.