Correlation Between Schwab Small-cap and Jhancock Diversified
Can any of the company-specific risk be diversified away by investing in both Schwab Small-cap 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 Schwab Small-cap and Jhancock Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Small Cap Index and Jhancock Diversified Macro, you can compare the effects of market volatilities on Schwab Small-cap 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 Schwab Small-cap with a short position of Jhancock Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Small-cap and Jhancock Diversified.
Diversification Opportunities for Schwab Small-cap and Jhancock Diversified
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Schwab and Jhancock is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Small Cap 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 Schwab Small-cap 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 Schwab Small Cap 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 Schwab Small-cap i.e., Schwab Small-cap and Jhancock Diversified go up and down completely randomly.
Pair Corralation between Schwab Small-cap and Jhancock Diversified
Assuming the 90 days horizon Schwab Small Cap Index is expected to under-perform the Jhancock Diversified. In addition to that, Schwab Small-cap is 3.62 times more volatile than Jhancock Diversified Macro. It trades about -0.27 of its total potential returns per unit of risk. Jhancock Diversified Macro is currently generating about 0.02 per unit of volatility. If you would invest 911.00 in Jhancock Diversified Macro on October 10, 2024 and sell it today you would earn a total of 1.00 from holding Jhancock Diversified Macro or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Small Cap Index vs. Jhancock Diversified Macro
Performance |
| Timeline |
| Schwab Small Cap |
| Jhancock Diversified |
Schwab Small-cap and Jhancock Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Small-cap and Jhancock Diversified
The main advantage of trading using opposite Schwab Small-cap and Jhancock Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Small-cap 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.| Schwab Small-cap vs. Schwab International Index | Schwab Small-cap vs. Schwab Total Stock | Schwab Small-cap vs. Schwab Sp 500 | Schwab Small-cap vs. Schwab 1000 Index |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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