Correlation Between T REX and John Hancock
Can any of the company-specific risk be diversified away by investing in both T REX 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 T REX and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T REX 2X Long and John Hancock Hedged, you can compare the effects of market volatilities on T REX 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 T REX with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of T REX and John Hancock.
Diversification Opportunities for T REX and John Hancock
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MSTU and John is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding T REX 2X Long and John Hancock Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Hedged and T REX 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 T REX 2X Long 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 Hedged has no effect on the direction of T REX i.e., T REX and John Hancock go up and down completely randomly.
Pair Corralation between T REX and John Hancock
Given the investment horizon of 90 days T REX 2X Long is expected to generate 23.04 times more return on investment than John Hancock. However, T REX is 23.04 times more volatile than John Hancock Hedged. It trades about 0.31 of its potential returns per unit of risk. John Hancock Hedged is currently generating about 0.14 per unit of risk. If you would invest 2,552 in T REX 2X Long on September 3, 2024 and sell it today you would earn a total of 13,309 from holding T REX 2X Long or generate 521.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 42.4% |
| Values | Daily Returns |
T REX 2X Long vs. John Hancock Hedged
Performance |
| Timeline |
| T REX 2X |
| John Hancock Hedged |
T REX and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T REX and John Hancock
The main advantage of trading using opposite T REX and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T REX 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.| T REX vs. Tidal Trust II | T REX vs. Tidal Trust II | T REX vs. Direxion Daily META | T REX vs. Direxion Daily META |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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