Correlation Between Mid-cap Growth and J Hancock

Can any of the company-specific risk be diversified away by investing in both Mid-cap Growth and J 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 Mid-cap Growth and J Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap Growth Profund and J Hancock Ii, you can compare the effects of market volatilities on Mid-cap Growth and J 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 Mid-cap Growth with a short position of J Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap Growth and J Hancock.

Diversification Opportunities for Mid-cap Growth and J Hancock

0.88

Correlation Coefficient

Mid-cap Growth  J Hancock

Very poor diversification

The 3 months correlation between MID-CAP and JRODX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth Profund and J Hancock Ii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Hancock Ii and Mid-cap Growth 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 Mid Cap Growth Profund are associated (or correlated) with J Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Hancock Ii has no effect on the direction of Mid-cap Growth i.e., Mid-cap Growth and J Hancock go up and down completely randomly.

Pair Corralation between Mid-cap Growth and J Hancock

Assuming the 90 days horizon Mid Cap Growth Profund is expected to generate 1.8 times more return on investment than J Hancock. However, Mid-cap Growth is 1.8 times more volatile than J Hancock Ii. It trades about 0.27 of its potential returns per unit of risk. J Hancock Ii is currently generating about 0.13 per unit of risk. If you would invest  10,840  in Mid Cap Growth Profund on August 30, 2024 and sell it today you would earn a total of  766.00  from holding Mid Cap Growth Profund or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Mid Cap Growth Profund  vs.  J Hancock Ii

Mid Cap Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth Profund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mid-cap Growth may actually be approaching a critical reversion point that can send shares even higher in December 2024.

J Hancock Ii

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J Hancock Ii are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, J Hancock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid-cap Growth and J Hancock

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

The idea behind Mid Cap Growth Profund and J Hancock Ii 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.