Correlation Between Vanguard Small and J Hancock

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

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

Diversification Opportunities for Vanguard Small and J Hancock

0.86

Correlation Coefficient

Vanguard Small  J Hancock

Very poor diversification

The 3 months correlation between Vanguard and JRODX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value 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 Vanguard Small 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 Vanguard Small Cap Value 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 Vanguard Small i.e., Vanguard Small and J Hancock go up and down completely randomly.

Pair Corralation between Vanguard Small and J Hancock

Assuming the 90 days horizon Vanguard Small Cap Value is expected to under-perform the J Hancock. In addition to that, Vanguard Small is 1.23 times more volatile than J Hancock Ii. It trades about -0.35 of its total potential returns per unit of risk. J Hancock Ii is currently generating about -0.06 per unit of volatility. If you would invest  1,666  in J Hancock Ii on September 27, 2024 and sell it today you would lose (16.00) from holding J Hancock Ii or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Vanguard Small Cap Value  vs.  J Hancock Ii

Vanguard Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

J Hancock Ii

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J Hancock Ii are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Vanguard Small and J Hancock

The main advantage of trading using opposite Vanguard Small and J Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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.

The idea behind Vanguard Small Cap Value and J Hancock Ii 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.