Correlation Between Multi Index and Jhancock New

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

By analyzing existing cross correlation between Multi Index 2030 Lifetime and Jhancock New Opportunities, you can compare the effects of market volatilities on Multi Index and Jhancock New 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 Multi Index with a short position of Jhancock New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Index and Jhancock New.

Diversification Opportunities for Multi Index and Jhancock New

0.67

Correlation Coefficient

Multi Index  Jhancock New

Poor diversification

The 3 months correlation between Multi and Jhancock is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Multi Index 2030 Lifetime and Jhancock New Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock New Opportu and Multi Index 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 Multi Index 2030 Lifetime are associated (or correlated) with Jhancock New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock New Opportu has no effect on the direction of Multi Index i.e., Multi Index and Jhancock New go up and down completely randomly.

Pair Corralation between Multi Index and Jhancock New

Assuming the 90 days horizon Multi Index 2030 Lifetime is expected to generate 0.46 times more return on investment than Jhancock New. However, Multi Index 2030 Lifetime is 2.17 times less risky than Jhancock New. It trades about -0.11 of its potential returns per unit of risk. Jhancock New Opportunities is currently generating about -0.11 per unit of risk. If you would invest  1,260  in Multi Index 2030 Lifetime on September 20, 2024 and sell it today you would lose (17.00) from holding Multi Index 2030 Lifetime or give up 1.35% of portfolio value over 90 days.

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

Multi Index 2030 Lifetime  vs.  Jhancock New Opportunities

Multi Index 2030

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Index 2030 Lifetime has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Multi Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jhancock New Opportu

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jhancock New Opportunities are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jhancock New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multi Index and Jhancock New

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

The idea behind Multi Index 2030 Lifetime and Jhancock New Opportunities 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.