Correlation Between Jhancock Disciplined and American Funds
Can any of the company-specific risk be diversified away by investing in both Jhancock Disciplined and American Funds 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 Disciplined and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jhancock Disciplined Value and American Funds 2040, you can compare the effects of market volatilities on Jhancock Disciplined and American Funds 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 Disciplined with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Disciplined and American Funds.
Diversification Opportunities for Jhancock Disciplined and American Funds
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jhancock and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Disciplined Value and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 and Jhancock Disciplined 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 Disciplined Value are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Jhancock Disciplined i.e., Jhancock Disciplined and American Funds go up and down completely randomly.
Pair Corralation between Jhancock Disciplined and American Funds
Assuming the 90 days horizon Jhancock Disciplined Value is expected to generate 1.85 times more return on investment than American Funds. However, Jhancock Disciplined is 1.85 times more volatile than American Funds 2040. It trades about 0.13 of its potential returns per unit of risk. American Funds 2040 is currently generating about 0.0 per unit of risk. If you would invest 2,620 in Jhancock Disciplined Value on August 24, 2024 and sell it today you would earn a total of 77.00 from holding Jhancock Disciplined Value or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jhancock Disciplined Value vs. American Funds 2040
Performance |
| Timeline |
| Jhancock Disciplined |
| American Funds 2040 |
Jhancock Disciplined and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jhancock Disciplined and American Funds
The main advantage of trading using opposite Jhancock Disciplined and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock Disciplined position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.The idea behind Jhancock Disciplined Value and American Funds 2040 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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