Correlation Between Dimensional International and John Hancock
Can any of the company-specific risk be diversified away by investing in both Dimensional International 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 International 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 International Value and John Hancock Exchange Traded, you can compare the effects of market volatilities on Dimensional International 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 International with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and John Hancock.
Diversification Opportunities for Dimensional International and John Hancock
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and John is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International Valu 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 International 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 International Value 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 International i.e., Dimensional International and John Hancock go up and down completely randomly.
Pair Corralation between Dimensional International and John Hancock
Given the investment horizon of 90 days Dimensional International Value is expected to generate 1.0 times more return on investment than John Hancock. However, Dimensional International Value is 1.0 times less risky than John Hancock. It trades about -0.01 of its potential returns per unit of risk. John Hancock Exchange Traded is currently generating about -0.03 per unit of risk. If you would invest 3,684 in Dimensional International Value on August 26, 2024 and sell it today you would lose (38.00) from holding Dimensional International Value or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International Valu vs. John Hancock Exchange Traded
Performance |
| Timeline |
| Dimensional International |
| John Hancock Exchange |
Dimensional International and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and John Hancock
The main advantage of trading using opposite Dimensional International and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International 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.The idea behind Dimensional International Value and John Hancock Exchange Traded 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.
| John Hancock vs. Dimensional Targeted Value | John Hancock vs. Dimensional Small Cap | John Hancock vs. Dimensional Marketwide Value | John Hancock vs. Dimensional Core Equity |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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