Correlation Between Jhancock Global and Great West

Can any of the company-specific risk be diversified away by investing in both Jhancock Global and Great West 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 Jhancock Global and Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jhancock Global Equity and Great West Goldman Sachs, you can compare the effects of market volatilities on Jhancock Global and Great West 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 Jhancock Global with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Global and Great West.

Diversification Opportunities for Jhancock Global and Great West

0.58

Correlation Coefficient

Jhancock Global  Great West

Very weak diversification

The 3 months correlation between Jhancock and Great is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Global Equity and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman and Jhancock Global 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 Jhancock Global Equity are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of Jhancock Global i.e., Jhancock Global and Great West go up and down completely randomly.

Pair Corralation between Jhancock Global and Great West

Assuming the 90 days horizon Jhancock Global is expected to generate 13.02 times less return on investment than Great West. But when comparing it to its historical volatility, Jhancock Global Equity is 1.27 times less risky than Great West. It trades about 0.01 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  881.00  in Great West Goldman Sachs on September 22, 2024 and sell it today you would earn a total of  68.00  from holding Great West Goldman Sachs or generate 7.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Jhancock Global Equity  vs.  Great West Goldman Sachs

Jhancock Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jhancock Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Jhancock Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Goldman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Goldman Sachs has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jhancock Global and Great West

The main advantage of trading using opposite Jhancock Global and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock Global position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.

The idea behind Jhancock Global Equity and Great West Goldman Sachs 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.