Correlation Between Cable One and J J
Can any of the company-specific risk be diversified away by investing in both Cable One and J J 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 Cable One and J J into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and J J Snack, you can compare the effects of market volatilities on Cable One and J J 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 Cable One with a short position of J J. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and J J.
Diversification Opportunities for Cable One and J J
Very weak diversification
The 3 months correlation between Cable and JJSF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and J J Snack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J J Snack and Cable One 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 Cable One are associated (or correlated) with J J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J J Snack has no effect on the direction of Cable One i.e., Cable One and J J go up and down completely randomly.
Pair Corralation between Cable One and J J
Given the investment horizon of 90 days Cable One is expected to under-perform the J J. In addition to that, Cable One is 1.65 times more volatile than J J Snack. It trades about -0.04 of its total potential returns per unit of risk. J J Snack is currently generating about 0.04 per unit of volatility. If you would invest 13,780 in J J Snack on August 27, 2024 and sell it today you would earn a total of 3,336 from holding J J Snack or generate 24.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. J J Snack
Performance |
| Timeline |
| Cable One |
| J J Snack |
Cable One and J J Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and J J
The main advantage of trading using opposite Cable One and J J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, J J 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 J will offset losses from the drop in J J's long position.| Cable One vs. Liberty Broadband Srs | Cable One vs. Liberty Broadband Corp | Cable One vs. Telkom Indonesia Tbk | Cable One vs. Liberty Global 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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