Correlation Between JPMorgan Diversified and John Hancock
Can any of the company-specific risk be diversified away by investing in both JPMorgan Diversified and John Hancock 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 JPMorgan Diversified and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Diversified Return and John Hancock Multifactor, you can compare the effects of market volatilities on JPMorgan Diversified and John Hancock 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 JPMorgan Diversified with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Diversified and John Hancock.
Diversification Opportunities for JPMorgan Diversified and John Hancock
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between JPMorgan and John is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Diversified Return and John Hancock Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Multifactor and JPMorgan 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 JPMorgan Diversified Return are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Multifactor has no effect on the direction of JPMorgan Diversified i.e., JPMorgan Diversified and John Hancock go up and down completely randomly.
Pair Corralation between JPMorgan Diversified and John Hancock
Given the investment horizon of 90 days JPMorgan Diversified is expected to generate 2.5 times less return on investment than John Hancock. But when comparing it to its historical volatility, JPMorgan Diversified Return is 1.1 times less risky than John Hancock. It trades about 0.05 of its potential returns per unit of risk. John Hancock Multifactor is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,921 in John Hancock Multifactor on August 28, 2024 and sell it today you would earn a total of 2,368 from holding John Hancock Multifactor or generate 48.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Diversified Return vs. John Hancock Multifactor
Performance |
| Timeline |
| JPMorgan Diversified |
| John Hancock Multifactor |
JPMorgan Diversified and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Diversified and John Hancock
The main advantage of trading using opposite JPMorgan Diversified and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Diversified position performs unexpectedly, John Hancock 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 John Hancock will offset losses from the drop in John Hancock's long position.The idea behind JPMorgan Diversified Return and John Hancock Multifactor 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.
| John Hancock vs. John Hancock Multifactor | John Hancock vs. JPMorgan Diversified Return | John Hancock vs. iShares Equity Factor | John Hancock vs. John Hancock Multifactor |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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