Correlation Between Adirondack Small and John Hancock
Can any of the company-specific risk be diversified away by investing in both Adirondack Small and John 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 Adirondack Small and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adirondack Small Cap and John Hancock Financial, you can compare the effects of market volatilities on Adirondack Small and John 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 Adirondack Small with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adirondack Small and John Hancock.
Diversification Opportunities for Adirondack Small and John Hancock
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adirondack and John is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Adirondack Small Cap and John Hancock Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Financial and Adirondack 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 Adirondack Small Cap are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Financial has no effect on the direction of Adirondack Small i.e., Adirondack Small and John Hancock go up and down completely randomly.
Pair Corralation between Adirondack Small and John Hancock
Assuming the 90 days horizon Adirondack Small Cap is expected to generate 0.6 times more return on investment than John Hancock. However, Adirondack Small Cap is 1.66 times less risky than John Hancock. It trades about 0.05 of its potential returns per unit of risk. John Hancock Financial is currently generating about 0.03 per unit of risk. If you would invest 2,442 in Adirondack Small Cap on October 19, 2024 and sell it today you would earn a total of 782.00 from holding Adirondack Small Cap or generate 32.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adirondack Small Cap vs. John Hancock Financial
Performance |
| Timeline |
| Adirondack Small Cap |
| John Hancock Financial |
Adirondack Small and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adirondack Small and John Hancock
The main advantage of trading using opposite Adirondack Small and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adirondack Small position performs unexpectedly, John 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 John Hancock will offset losses from the drop in John Hancock's long position.| Adirondack Small vs. Wp Large Cap | Adirondack Small vs. Franklin Vertible Securities | Adirondack Small vs. Dunham Monthly Distribution | Adirondack Small vs. Blackrock Low Duration |
| John Hancock vs. Tekla Life Sciences | John Hancock vs. Tekla World Healthcare | John Hancock vs. Tekla Healthcare Opportunities | John Hancock vs. Royce Value Closed |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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