Correlation Between Multimanager Lifestyle and Jhancock Multimanager

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

By analyzing existing cross correlation between Multimanager Lifestyle Moderate and Jhancock Multimanager 2065, you can compare the effects of market volatilities on Multimanager Lifestyle and Jhancock Multimanager 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 Multimanager Lifestyle with a short position of Jhancock Multimanager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multimanager Lifestyle and Jhancock Multimanager.

Diversification Opportunities for Multimanager Lifestyle and Jhancock Multimanager

0.68

Correlation Coefficient

Multimanager Lifestyle  Jhancock Multimanager

Poor diversification

The 3 months correlation between Multimanager and Jhancock is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Multimanager Lifestyle Moderat and Jhancock Multimanager 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Multimanager and Multimanager Lifestyle 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 Multimanager Lifestyle Moderate are associated (or correlated) with Jhancock Multimanager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Multimanager has no effect on the direction of Multimanager Lifestyle i.e., Multimanager Lifestyle and Jhancock Multimanager go up and down completely randomly.

Pair Corralation between Multimanager Lifestyle and Jhancock Multimanager

Assuming the 90 days horizon Multimanager Lifestyle is expected to generate 10.73 times less return on investment than Jhancock Multimanager. But when comparing it to its historical volatility, Multimanager Lifestyle Moderate is 2.01 times less risky than Jhancock Multimanager. It trades about 0.02 of its potential returns per unit of risk. Jhancock Multimanager 2065 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,329  in Jhancock Multimanager 2065 on September 15, 2024 and sell it today you would earn a total of  62.00  from holding Jhancock Multimanager 2065 or generate 4.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Multimanager Lifestyle Moderat  vs.  Jhancock Multimanager 2065

Multimanager Lifestyle

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Multimanager Lifestyle Moderate are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Multimanager Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jhancock Multimanager

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jhancock Multimanager 2065 are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Jhancock Multimanager is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multimanager Lifestyle and Jhancock Multimanager

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

The idea behind Multimanager Lifestyle Moderate and Jhancock Multimanager 2065 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.