Correlation Between Jhancock Multimanager and California Bond
Can any of the company-specific risk be diversified away by investing in both Jhancock Multimanager and California Bond 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 Jhancock Multimanager and California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jhancock Multimanager 2065 and California Bond Fund, you can compare the effects of market volatilities on Jhancock Multimanager and California Bond 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 Jhancock Multimanager with a short position of California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Multimanager and California Bond.
Diversification Opportunities for Jhancock Multimanager and California Bond
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jhancock and California is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Multimanager 2065 and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond and Jhancock Multimanager 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 Jhancock Multimanager 2065 are associated (or correlated) with California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Jhancock Multimanager i.e., Jhancock Multimanager and California Bond go up and down completely randomly.
Pair Corralation between Jhancock Multimanager and California Bond
Assuming the 90 days horizon Jhancock Multimanager is expected to generate 1.04 times less return on investment than California Bond. In addition to that, Jhancock Multimanager is 4.67 times more volatile than California Bond Fund. It trades about 0.09 of its total potential returns per unit of risk. California Bond Fund is currently generating about 0.44 per unit of volatility. If you would invest 1,041 in California Bond Fund on September 13, 2024 and sell it today you would earn a total of 10.00 from holding California Bond Fund or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Jhancock Multimanager 2065 vs. California Bond Fund
Performance |
| Timeline |
| Jhancock Multimanager |
| California Bond |
Jhancock Multimanager and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jhancock Multimanager and California Bond
The main advantage of trading using opposite Jhancock Multimanager and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock Multimanager position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.The idea behind Jhancock Multimanager 2065 and California Bond Fund 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.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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