Correlation Between First American and Jhancock Multimanager
Can any of the company-specific risk be diversified away by investing in both First American and Jhancock Multimanager 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 First American and Jhancock Multimanager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Funds and Jhancock Multimanager 2065, you can compare the effects of market volatilities on First American and Jhancock Multimanager 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 First American with a short position of Jhancock Multimanager. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Jhancock Multimanager.
Diversification Opportunities for First American and Jhancock Multimanager
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Jhancock is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding First American Funds and Jhancock Multimanager 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Multimanager and First American 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 First American Funds are associated (or correlated) with Jhancock Multimanager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Multimanager has no effect on the direction of First American i.e., First American and Jhancock Multimanager go up and down completely randomly.
Pair Corralation between First American and Jhancock Multimanager
Assuming the 90 days horizon First American Funds is expected to generate 23.31 times more return on investment than Jhancock Multimanager. However, First American is 23.31 times more volatile than Jhancock Multimanager 2065. It trades about 0.03 of its potential returns per unit of risk. Jhancock Multimanager 2065 is currently generating about 0.09 per unit of risk. If you would invest 311.00 in First American Funds on September 3, 2024 and sell it today you would lose (211.00) from holding First American Funds or give up 67.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First American Funds vs. Jhancock Multimanager 2065
Performance |
| Timeline |
| First American Funds |
| Jhancock Multimanager |
First American and Jhancock Multimanager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and Jhancock Multimanager
The main advantage of trading using opposite First American and Jhancock Multimanager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American position performs unexpectedly, Jhancock Multimanager 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 Jhancock Multimanager will offset losses from the drop in Jhancock Multimanager's long position.| First American vs. Vanguard Total Stock | First American vs. Vanguard 500 Index | First American vs. Vanguard Total Stock | First American vs. Vanguard Total Stock |
| Jhancock Multimanager vs. Lord Abbett Emerging | Jhancock Multimanager vs. First American Funds | Jhancock Multimanager vs. John Hancock Money | Jhancock Multimanager vs. Wilmington Funds |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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