Correlation Between Basic Materials and JBS ON
Can any of the company-specific risk be diversified away by investing in both Basic Materials and JBS ON 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 Basic Materials and JBS ON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and JBS ON NM, you can compare the effects of market volatilities on Basic Materials and JBS ON 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 Basic Materials with a short position of JBS ON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and JBS ON.
Diversification Opportunities for Basic Materials and JBS ON
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Basic and JBS is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and JBS ON NM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS ON NM and Basic Materials 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 Basic Materials are associated (or correlated) with JBS ON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS ON NM has no effect on the direction of Basic Materials i.e., Basic Materials and JBS ON go up and down completely randomly.
Pair Corralation between Basic Materials and JBS ON
Assuming the 90 days trading horizon Basic Materials is expected to generate 1.97 times less return on investment than JBS ON. But when comparing it to its historical volatility, Basic Materials is 1.64 times less risky than JBS ON. It trades about 0.12 of its potential returns per unit of risk. JBS ON NM is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,534 in JBS ON NM on September 2, 2024 and sell it today you would earn a total of 163.00 from holding JBS ON NM or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Basic Materials vs. JBS ON NM
Performance |
| Timeline |
Basic Materials and JBS ON Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
JBS ON NM
Pair trading matchups for JBS ON
Pair Trading with Basic Materials and JBS ON
The main advantage of trading using opposite Basic Materials and JBS ON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, JBS ON 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 JBS ON will offset losses from the drop in JBS ON's long position.| Basic Materials vs. Uber Technologies | Basic Materials vs. Palantir Technologies | Basic Materials vs. Marvell Technology | Basic Materials vs. Align Technology |
| JBS ON vs. Lupatech SA | JBS ON vs. Palantir Technologies | JBS ON vs. Zoom Video Communications | JBS ON vs. Agilent Technologies |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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