Correlation Between Faction Investment and CNJ Capital
Can any of the company-specific risk be diversified away by investing in both Faction Investment and CNJ Capital 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 Faction Investment and CNJ Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faction Investment Group and CNJ Capital Investments, you can compare the effects of market volatilities on Faction Investment and CNJ Capital 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 Faction Investment with a short position of CNJ Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faction Investment and CNJ Capital.
Diversification Opportunities for Faction Investment and CNJ Capital
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Faction and CNJ is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Faction Investment Group and CNJ Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNJ Capital Investments and Faction Investment 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 Faction Investment Group are associated (or correlated) with CNJ Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNJ Capital Investments has no effect on the direction of Faction Investment i.e., Faction Investment and CNJ Capital go up and down completely randomly.
Pair Corralation between Faction Investment and CNJ Capital
Assuming the 90 days trading horizon Faction Investment Group is expected to under-perform the CNJ Capital. But the stock apears to be less risky and, when comparing its historical volatility, Faction Investment Group is 1.07 times less risky than CNJ Capital. The stock trades about -0.01 of its potential returns per unit of risk. The CNJ Capital Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15.00 in CNJ Capital Investments on August 24, 2024 and sell it today you would earn a total of 31.00 from holding CNJ Capital Investments or generate 206.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 72.06% |
| Values | Daily Returns |
Faction Investment Group vs. CNJ Capital Investments
Performance |
| Timeline |
| Faction Investment |
| CNJ Capital Investments |
Faction Investment and CNJ Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faction Investment and CNJ Capital
The main advantage of trading using opposite Faction Investment and CNJ Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faction Investment position performs unexpectedly, CNJ Capital 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 CNJ Capital will offset losses from the drop in CNJ Capital's long position.| Faction Investment vs. Waste Connections | Faction Investment vs. CCL Industries | Faction Investment vs. iShares Canadian HYBrid | Faction Investment vs. Solar Alliance Energy |
| CNJ Capital vs. Waste Connections | CNJ Capital vs. CCL Industries | CNJ Capital vs. iShares Canadian HYBrid | CNJ Capital vs. Solar Alliance Energy |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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