Correlation Between Eat Beyond and JEFFERIES

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Can any of the company-specific risk be diversified away by investing in both Eat Beyond and JEFFERIES 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 Eat Beyond and JEFFERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eat Beyond Global and JEFFERIES GROUP INC, you can compare the effects of market volatilities on Eat Beyond and JEFFERIES 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 Eat Beyond with a short position of JEFFERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eat Beyond and JEFFERIES.

Diversification Opportunities for Eat Beyond and JEFFERIES

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Eat and JEFFERIES is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eat Beyond Global and JEFFERIES GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JEFFERIES GROUP INC and Eat Beyond 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 Eat Beyond Global are associated (or correlated) with JEFFERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JEFFERIES GROUP INC has no effect on the direction of Eat Beyond i.e., Eat Beyond and JEFFERIES go up and down completely randomly.

Pair Corralation between Eat Beyond and JEFFERIES

Assuming the 90 days horizon Eat Beyond Global is expected to generate 5.7 times more return on investment than JEFFERIES. However, Eat Beyond is 5.7 times more volatile than JEFFERIES GROUP INC. It trades about 0.21 of its potential returns per unit of risk. JEFFERIES GROUP INC is currently generating about 0.01 per unit of risk. If you would invest  4.52  in Eat Beyond Global on January 24, 2025 and sell it today you would earn a total of  2.06  from holding Eat Beyond Global or generate 45.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Eat Beyond Global  vs.  JEFFERIES GROUP INC

 Performance 
       Timeline  
Eat Beyond Global 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Eat Beyond Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Eat Beyond is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JEFFERIES GROUP INC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days JEFFERIES GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JEFFERIES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Eat Beyond and JEFFERIES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eat Beyond and JEFFERIES

The main advantage of trading using opposite Eat Beyond and JEFFERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eat Beyond position performs unexpectedly, JEFFERIES 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 JEFFERIES will offset losses from the drop in JEFFERIES's long position.
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The idea behind Eat Beyond Global and JEFFERIES GROUP INC 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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