Correlation Between Aberforth Smaller and Jadestone Energy
Can any of the company-specific risk be diversified away by investing in both Aberforth Smaller and Jadestone Energy 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 Aberforth Smaller and Jadestone Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberforth Smaller Companies and Jadestone Energy, you can compare the effects of market volatilities on Aberforth Smaller and Jadestone Energy 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 Aberforth Smaller with a short position of Jadestone Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberforth Smaller and Jadestone Energy.
Diversification Opportunities for Aberforth Smaller and Jadestone Energy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aberforth and Jadestone is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Aberforth Smaller Companies and Jadestone Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jadestone Energy and Aberforth Smaller 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 Aberforth Smaller Companies are associated (or correlated) with Jadestone Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jadestone Energy has no effect on the direction of Aberforth Smaller i.e., Aberforth Smaller and Jadestone Energy go up and down completely randomly.
Pair Corralation between Aberforth Smaller and Jadestone Energy
Assuming the 90 days trading horizon Aberforth Smaller Companies is expected to generate 0.51 times more return on investment than Jadestone Energy. However, Aberforth Smaller Companies is 1.94 times less risky than Jadestone Energy. It trades about -0.07 of its potential returns per unit of risk. Jadestone Energy is currently generating about -0.04 per unit of risk. If you would invest 148,000 in Aberforth Smaller Companies on September 2, 2024 and sell it today you would lose (2,400) from holding Aberforth Smaller Companies or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberforth Smaller Companies vs. Jadestone Energy
Performance |
| Timeline |
| Aberforth Smaller |
| Jadestone Energy |
Aberforth Smaller and Jadestone Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberforth Smaller and Jadestone Energy
The main advantage of trading using opposite Aberforth Smaller and Jadestone Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberforth Smaller position performs unexpectedly, Jadestone Energy 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 Jadestone Energy will offset losses from the drop in Jadestone Energy's long position.| Aberforth Smaller vs. Toyota Motor Corp | Aberforth Smaller vs. SoftBank Group Corp | Aberforth Smaller vs. OTP Bank Nyrt | Aberforth Smaller vs. Las Vegas Sands |
| Jadestone Energy vs. Ally Financial | Jadestone Energy vs. Hochschild Mining plc | Jadestone Energy vs. Sydbank | Jadestone Energy vs. Metals Exploration Plc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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