Correlation Between Royce Total and John Hancock
Can any of the company-specific risk be diversified away by investing in both Royce Total 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 Royce Total and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Total Return and John Hancock Global, you can compare the effects of market volatilities on Royce Total 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 Royce Total with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Total and John Hancock.
Diversification Opportunities for Royce Total and John Hancock
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Royce and John is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Royce Total Return and John Hancock Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Global and Royce Total 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 Royce Total Return 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 Global has no effect on the direction of Royce Total i.e., Royce Total and John Hancock go up and down completely randomly.
Pair Corralation between Royce Total and John Hancock
Assuming the 90 days horizon Royce Total Return is expected to generate 2.41 times more return on investment than John Hancock. However, Royce Total is 2.41 times more volatile than John Hancock Global. It trades about 0.18 of its potential returns per unit of risk. John Hancock Global is currently generating about 0.05 per unit of risk. If you would invest 781.00 in Royce Total Return on September 5, 2024 and sell it today you would earn a total of 114.00 from holding Royce Total Return or generate 14.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Royce Total Return vs. John Hancock Global
Performance |
Timeline |
Royce Total Return |
John Hancock Global |
Royce Total and John Hancock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Royce Total and John Hancock
The main advantage of trading using opposite Royce Total and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Total 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.Royce Total vs. Royce Micro Cap Fund | Royce Total vs. Royce Total Return | Royce Total vs. Royce Special Equity | Royce Total vs. Longleaf Partners Fund |
John Hancock vs. Regional Bank Fund | John Hancock vs. Regional Bank Fund | John Hancock vs. Multimanager Lifestyle Moderate | John Hancock vs. Multimanager Lifestyle Balanced |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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