Correlation Between Power Momentum and Jhancock Diversified
Can any of the company-specific risk be diversified away by investing in both Power Momentum and Jhancock Diversified 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 Power Momentum and Jhancock Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Momentum Index and Jhancock Diversified Macro, you can compare the effects of market volatilities on Power Momentum and Jhancock Diversified 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 Power Momentum with a short position of Jhancock Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Momentum and Jhancock Diversified.
Diversification Opportunities for Power Momentum and Jhancock Diversified
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and Jhancock is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Power Momentum Index and Jhancock Diversified Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Diversified and Power Momentum 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 Power Momentum Index are associated (or correlated) with Jhancock Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Diversified has no effect on the direction of Power Momentum i.e., Power Momentum and Jhancock Diversified go up and down completely randomly.
Pair Corralation between Power Momentum and Jhancock Diversified
Assuming the 90 days horizon Power Momentum Index is expected to generate 1.86 times more return on investment than Jhancock Diversified. However, Power Momentum is 1.86 times more volatile than Jhancock Diversified Macro. It trades about 0.31 of its potential returns per unit of risk. Jhancock Diversified Macro is currently generating about 0.15 per unit of risk. If you would invest 1,413 in Power Momentum Index on September 4, 2024 and sell it today you would earn a total of 90.00 from holding Power Momentum Index or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Momentum Index vs. Jhancock Diversified Macro
Performance |
| Timeline |
| Power Momentum Index |
| Jhancock Diversified |
Power Momentum and Jhancock Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Momentum and Jhancock Diversified
The main advantage of trading using opposite Power Momentum and Jhancock Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Momentum position performs unexpectedly, Jhancock Diversified 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 Jhancock Diversified will offset losses from the drop in Jhancock Diversified's long position.The idea behind Power Momentum Index and Jhancock Diversified Macro 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.
| Jhancock Diversified vs. Regional Bank Fund | Jhancock Diversified vs. Regional Bank Fund | Jhancock Diversified vs. Multimanager Lifestyle Moderate | Jhancock Diversified vs. Multimanager Lifestyle Balanced |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |