Correlation Between Diamond Hill and John Hancock
Can any of the company-specific risk be diversified away by investing in both Diamond Hill 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 Diamond Hill and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Large and John Hancock Disciplined, you can compare the effects of market volatilities on Diamond Hill 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 Diamond Hill with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and John Hancock.
Diversification Opportunities for Diamond Hill and John Hancock
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Diamond and John is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Large and John Hancock Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Disciplined and Diamond Hill 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 Diamond Hill Large 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 Disciplined has no effect on the direction of Diamond Hill i.e., Diamond Hill and John Hancock go up and down completely randomly.
Pair Corralation between Diamond Hill and John Hancock
Assuming the 90 days horizon Diamond Hill is expected to generate 1.71 times less return on investment than John Hancock. But when comparing it to its historical volatility, Diamond Hill Large is 1.35 times less risky than John Hancock. It trades about 0.2 of its potential returns per unit of risk. John Hancock Disciplined is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,585 in John Hancock Disciplined on September 4, 2024 and sell it today you would earn a total of 150.00 from holding John Hancock Disciplined or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Large vs. John Hancock Disciplined
Performance |
| Timeline |
| Diamond Hill Large |
| John Hancock Disciplined |
Diamond Hill and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and John Hancock
The main advantage of trading using opposite Diamond Hill and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill 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.| Diamond Hill vs. John Hancock Global | Diamond Hill vs. Edgewood Growth Fund | Diamond Hill vs. Hartford Schroders Emerging | Diamond Hill vs. Nuveen Intermediate Duration |
| John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Moderate | John Hancock vs. Multimanager Lifestyle Balanced |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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