Correlation Between Dimensional Small and John Hancock
Can any of the company-specific risk be diversified away by investing in both Dimensional 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 Dimensional 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 Dimensional Small Cap and John Hancock Exchange Traded, you can compare the effects of market volatilities on Dimensional 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 Dimensional Small with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Small and John Hancock.
Diversification Opportunities for Dimensional Small and John Hancock
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dimensional and John is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Small Cap and John Hancock Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Exchange and Dimensional 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 Dimensional 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 Exchange has no effect on the direction of Dimensional Small i.e., Dimensional Small and John Hancock go up and down completely randomly.
Pair Corralation between Dimensional Small and John Hancock
Given the investment horizon of 90 days Dimensional Small Cap is expected to generate 1.41 times more return on investment than John Hancock. However, Dimensional Small is 1.41 times more volatile than John Hancock Exchange Traded. It trades about 0.06 of its potential returns per unit of risk. John Hancock Exchange Traded is currently generating about 0.06 per unit of risk. If you would invest 5,108 in Dimensional Small Cap on August 30, 2024 and sell it today you would earn a total of 1,931 from holding Dimensional Small Cap or generate 37.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
Dimensional Small Cap vs. John Hancock Exchange Traded
Performance |
| Timeline |
| Dimensional Small Cap |
| John Hancock Exchange |
Dimensional Small and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Small and John Hancock
The main advantage of trading using opposite Dimensional Small and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 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.| Dimensional Small vs. Dimensional Targeted Value | Dimensional Small vs. Dimensional Equity ETF | Dimensional Small vs. Dimensional Core Equity | Dimensional Small vs. Dimensional International Core |
| John Hancock vs. Freedom Day Dividend | John Hancock vs. Franklin Templeton ETF | John Hancock vs. iShares MSCI China | John Hancock vs. Tidal Trust II |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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