Correlation Between Ford and J Hancock
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and J Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and J Hancock Ii, you can compare the effects of market volatilities on Ford 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 Ford with a short position of J Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and J Hancock.
Diversification Opportunities for Ford and J Hancock
Very weak diversification
The 3 months correlation between Ford and JROUX is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and J Hancock go up and down completely randomly.
Pair Corralation between Ford and J Hancock
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the J Hancock. In addition to that, Ford is 3.31 times more volatile than J Hancock Ii. It trades about -0.09 of its total potential returns per unit of risk. J Hancock Ii is currently generating about 0.24 per unit of volatility. If you would invest 1,373 in J Hancock Ii on November 9, 2024 and sell it today you would earn a total of 50.00 from holding J Hancock Ii or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. J Hancock Ii
Performance |
| Timeline |
| Ford Motor |
| J Hancock Ii |
Ford and J Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and J Hancock
The main advantage of trading using opposite Ford and J Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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.| J Hancock vs. Cohen Steers Real | J Hancock vs. Real Estate Ultrasector | J Hancock vs. Dunham Real Estate | J Hancock vs. Vanguard Reit Index |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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