Correlation Between Davis Financial and John Hancock
Can any of the company-specific risk be diversified away by investing in both Davis Financial 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 Davis Financial and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and John Hancock Focused, you can compare the effects of market volatilities on Davis Financial 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 Davis Financial with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and John Hancock.
Diversification Opportunities for Davis Financial and John Hancock
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Davis and John is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and John Hancock Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Focused and Davis Financial 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 Davis Financial Fund 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 Focused has no effect on the direction of Davis Financial i.e., Davis Financial and John Hancock go up and down completely randomly.
Pair Corralation between Davis Financial and John Hancock
Assuming the 90 days horizon Davis Financial is expected to generate 1.16 times less return on investment than John Hancock. In addition to that, Davis Financial is 4.2 times more volatile than John Hancock Focused. It trades about 0.02 of its total potential returns per unit of risk. John Hancock Focused is currently generating about 0.1 per unit of volatility. If you would invest 307.00 in John Hancock Focused on September 14, 2024 and sell it today you would earn a total of 1.00 from holding John Hancock Focused or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Davis Financial Fund vs. John Hancock Focused
Performance |
| Timeline |
| Davis Financial |
| John Hancock Focused |
Davis Financial and John Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and John Hancock
The main advantage of trading using opposite Davis Financial and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial 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.| Davis Financial vs. Gabelli Global Financial | Davis Financial vs. Mesirow Financial Small | Davis Financial vs. Icon Financial Fund | Davis Financial vs. Prudential Jennison Financial |
| John Hancock vs. Davis Financial Fund | John Hancock vs. John Hancock Financial | John Hancock vs. Blackrock Financial Institutions | John Hancock vs. Royce Global Financial |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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