Correlation Between Palm Valley and John Hancock

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

By analyzing existing cross correlation between Palm Valley Capital and John Hancock Ii, you can compare the effects of market volatilities on Palm Valley 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 Palm Valley with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palm Valley and John Hancock.

Diversification Opportunities for Palm Valley and John Hancock

0.47

Correlation Coefficient

Palm Valley  John Hancock

Very weak diversification

The 3 months correlation between Palm and John is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Palm Valley Capital and John Hancock Ii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Ii and Palm Valley 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 Palm Valley Capital 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 Ii has no effect on the direction of Palm Valley i.e., Palm Valley and John Hancock go up and down completely randomly.

Pair Corralation between Palm Valley and John Hancock

Assuming the 90 days horizon Palm Valley is expected to generate 7.2 times less return on investment than John Hancock. But when comparing it to its historical volatility, Palm Valley Capital is 8.43 times less risky than John Hancock. It trades about 0.09 of its potential returns per unit of risk. John Hancock Ii is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,831  in John Hancock Ii on September 14, 2024 and sell it today you would earn a total of  103.00  from holding John Hancock Ii or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Palm Valley Capital  vs.  John Hancock Ii

Palm Valley Capital

Risk-Adjusted Performance

7 of 100

OK

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

John Hancock Ii

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in John Hancock Ii are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, John 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 Palm Valley and John Hancock

The main advantage of trading using opposite Palm Valley and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palm Valley 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.

The idea behind Palm Valley Capital and John 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.