Correlation Between Basic Materials and JFL Living
Can any of the company-specific risk be diversified away by investing in both Basic Materials and JFL Living 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 JFL Living into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and JFL Living Fundo, you can compare the effects of market volatilities on Basic Materials and JFL Living 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 JFL Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and JFL Living.
Diversification Opportunities for Basic Materials and JFL Living
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Basic and JFL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and JFL Living Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JFL Living Fundo 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 JFL Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JFL Living Fundo has no effect on the direction of Basic Materials i.e., Basic Materials and JFL Living go up and down completely randomly.
Pair Corralation between Basic Materials and JFL Living
Assuming the 90 days trading horizon Basic Materials is expected to generate 20.07 times less return on investment than JFL Living. But when comparing it to its historical volatility, Basic Materials is 1.2 times less risky than JFL Living. It trades about 0.01 of its potential returns per unit of risk. JFL Living Fundo is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,940 in JFL Living Fundo on August 30, 2024 and sell it today you would earn a total of 295.00 from holding JFL Living Fundo or generate 4.25% 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. JFL Living Fundo
Performance |
| Timeline |
Basic Materials and JFL Living Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
JFL Living Fundo
Pair trading matchups for JFL Living
Pair Trading with Basic Materials and JFL Living
The main advantage of trading using opposite Basic Materials and JFL Living positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, JFL Living 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 JFL Living will offset losses from the drop in JFL Living's long position.| Basic Materials vs. United Rentals | Basic Materials vs. Livetech da Bahia | Basic Materials vs. Telecomunicaes Brasileiras SA | Basic Materials vs. Charter Communications |
| JFL Living vs. Energisa SA | JFL Living vs. BTG Pactual Logstica | JFL Living vs. Plano Plano Desenvolvimento | JFL Living vs. The Procter Gamble |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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