Correlation Between Visa and Jhancock Disciplined

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

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

Diversification Opportunities for Visa and Jhancock Disciplined

0.31

Correlation Coefficient

Visa  Jhancock Disciplined

Weak diversification

The 3 months correlation between Visa and Jhancock is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Jhancock Disciplined Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Disciplined and Visa 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 Visa Class A are associated (or correlated) with Jhancock Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Disciplined has no effect on the direction of Visa i.e., Visa and Jhancock Disciplined go up and down completely randomly.

Pair Corralation between Visa and Jhancock Disciplined

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.31 times more return on investment than Jhancock Disciplined. However, Visa is 1.31 times more volatile than Jhancock Disciplined Value. It trades about 0.17 of its potential returns per unit of risk. Jhancock Disciplined Value is currently generating about 0.02 per unit of risk. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  3,508  from holding Visa Class A or generate 11.14% return on investment over 90 days.

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

Visa Class A  vs.  Jhancock Disciplined Value

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Jhancock Disciplined

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jhancock Disciplined Value 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 Disciplined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Jhancock Disciplined

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

The idea behind Visa Class A and Jhancock Disciplined Value 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.