Correlation Between National Retail and John Bean
Can any of the company-specific risk be diversified away by investing in both National Retail and John Bean 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 National Retail and John Bean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and John Bean Technologies, you can compare the effects of market volatilities on National Retail and John Bean 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 National Retail with a short position of John Bean. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and John Bean.
Diversification Opportunities for National Retail and John Bean
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and John is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and John Bean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Bean Technologies and National Retail 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 National Retail Properties are associated (or correlated) with John Bean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Bean Technologies has no effect on the direction of National Retail i.e., National Retail and John Bean go up and down completely randomly.
Pair Corralation between National Retail and John Bean
Assuming the 90 days trading horizon National Retail is expected to generate 15.58 times less return on investment than John Bean. But when comparing it to its historical volatility, National Retail Properties is 2.01 times less risky than John Bean. It trades about 0.03 of its potential returns per unit of risk. John Bean Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 10,800 in John Bean Technologies on September 12, 2024 and sell it today you would earn a total of 900.00 from holding John Bean Technologies or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. John Bean Technologies
Performance |
| Timeline |
| National Retail Prop |
| John Bean Technologies |
National Retail and John Bean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and John Bean
The main advantage of trading using opposite National Retail and John Bean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, John Bean 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 Bean will offset losses from the drop in John Bean's long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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