Correlation Between Regional Bank and Jhancock Multimanager
Can any of the company-specific risk be diversified away by investing in both Regional Bank 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 Regional Bank and Jhancock Multimanager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and Jhancock Multimanager 2065, you can compare the effects of market volatilities on Regional Bank 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 Regional Bank with a short position of Jhancock Multimanager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Jhancock Multimanager.
Diversification Opportunities for Regional Bank and Jhancock Multimanager
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REGIONAL and Jhancock is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Jhancock Multimanager 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Multimanager and Regional Bank 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 Regional Bank Fund 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 Regional Bank i.e., Regional Bank and Jhancock Multimanager go up and down completely randomly.
Pair Corralation between Regional Bank and Jhancock Multimanager
Assuming the 90 days horizon Regional Bank Fund is expected to generate 2.27 times more return on investment than Jhancock Multimanager. However, Regional Bank is 2.27 times more volatile than Jhancock Multimanager 2065. It trades about 0.09 of its potential returns per unit of risk. Jhancock Multimanager 2065 is currently generating about 0.1 per unit of risk. If you would invest 2,066 in Regional Bank Fund on August 31, 2024 and sell it today you would earn a total of 1,319 from holding Regional Bank Fund or generate 63.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Regional Bank Fund vs. Jhancock Multimanager 2065
Performance |
| Timeline |
| Regional Bank |
| Jhancock Multimanager |
Regional Bank and Jhancock Multimanager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Jhancock Multimanager
The main advantage of trading using opposite Regional Bank and Jhancock Multimanager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank 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.| Regional Bank vs. American Century Investment | Regional Bank vs. Ashmore Emerging Markets | Regional Bank vs. Prudential Government Money | Regional Bank vs. Meeder Funds |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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