Correlation Between Jhancock Diversified and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Jhancock Diversified and Dow Jones 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 Diversified and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jhancock Diversified Macro and Dow Jones Industrial, you can compare the effects of market volatilities on Jhancock Diversified and Dow Jones 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 Diversified with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Diversified and Dow Jones.
Diversification Opportunities for Jhancock Diversified and Dow Jones
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jhancock and Dow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Diversified Macro and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Jhancock Diversified 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 Diversified Macro are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Jhancock Diversified i.e., Jhancock Diversified and Dow Jones go up and down completely randomly.
Pair Corralation between Jhancock Diversified and Dow Jones
Assuming the 90 days horizon Jhancock Diversified is expected to generate 46.92 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Jhancock Diversified Macro is 1.27 times less risky than Dow Jones. It trades about 0.0 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,394,710 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jhancock Diversified Macro vs. Dow Jones Industrial
Performance |
| Timeline |
Jhancock Diversified and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Jhancock Diversified Macro
Pair trading matchups for Jhancock Diversified
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Jhancock Diversified and Dow Jones
The main advantage of trading using opposite Jhancock Diversified and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock Diversified position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.The idea behind Jhancock Diversified Macro and Dow Jones Industrial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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