Correlation Between AGVC and JNT
Can any of the company-specific risk be diversified away by investing in both AGVC and JNT 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 AGVC and JNT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGVC and JNT, you can compare the effects of market volatilities on AGVC and JNT 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 AGVC with a short position of JNT. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGVC and JNT.
Diversification Opportunities for AGVC and JNT
Poor diversification
The 3 months correlation between AGVC and JNT is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AGVC and JNT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JNT and AGVC 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 AGVC are associated (or correlated) with JNT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JNT has no effect on the direction of AGVC i.e., AGVC and JNT go up and down completely randomly.
Pair Corralation between AGVC and JNT
Assuming the 90 days trading horizon AGVC is expected to generate 1.37 times less return on investment than JNT. In addition to that, AGVC is 1.02 times more volatile than JNT. It trades about 0.09 of its total potential returns per unit of risk. JNT is currently generating about 0.13 per unit of volatility. If you would invest 5.31 in JNT on August 25, 2024 and sell it today you would earn a total of 3.96 from holding JNT or generate 74.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGVC vs. JNT
Performance |
| Timeline |
| AGVC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| JNT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AGVC and JNT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGVC and JNT
The main advantage of trading using opposite AGVC and JNT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGVC position performs unexpectedly, JNT 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 JNT will offset losses from the drop in JNT's long position.The idea behind AGVC and JNT 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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