Correlation Between John Hancock and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both John Hancock and Diamond Hill 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 John Hancock and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Disciplined and Diamond Hill All, you can compare the effects of market volatilities on John Hancock and Diamond Hill 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 John Hancock with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Diamond Hill.
Diversification Opportunities for John Hancock and Diamond Hill
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Diamond is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Disciplined and Diamond Hill All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill All and John Hancock 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 John Hancock Disciplined are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill All has no effect on the direction of John Hancock i.e., John Hancock and Diamond Hill go up and down completely randomly.
Pair Corralation between John Hancock and Diamond Hill
Assuming the 90 days horizon John Hancock is expected to generate 1.29 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, John Hancock Disciplined is 1.27 times less risky than Diamond Hill. It trades about 0.09 of its potential returns per unit of risk. Diamond Hill All is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,953 in Diamond Hill All on September 1, 2024 and sell it today you would earn a total of 758.00 from holding Diamond Hill All or generate 38.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Disciplined vs. Diamond Hill All
Performance |
| Timeline |
| John Hancock Disciplined |
| Diamond Hill All |
John Hancock and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Diamond Hill
The main advantage of trading using opposite John Hancock and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| John Hancock vs. John Hancock Disciplined | John Hancock vs. John Hancock Bond | John Hancock vs. Us Global Leaders | John Hancock vs. Mfs International Value |
| Diamond Hill vs. Diamond Hill All | Diamond Hill vs. Hotchkis Wiley Small | Diamond Hill vs. Diamond Hill Select | Diamond Hill vs. Jpmorgan Large Cap |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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