Correlation Between John Bean and Nidec
Can any of the company-specific risk be diversified away by investing in both John Bean and Nidec 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 John Bean and Nidec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and Nidec, you can compare the effects of market volatilities on John Bean and Nidec 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 John Bean with a short position of Nidec. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Nidec.
Diversification Opportunities for John Bean and Nidec
Very good diversification
The 3 months correlation between John and Nidec is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec and John Bean 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 John Bean Technologies are associated (or correlated) with Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of John Bean i.e., John Bean and Nidec go up and down completely randomly.
Pair Corralation between John Bean and Nidec
Considering the 90-day investment horizon John Bean Technologies is expected to generate 0.4 times more return on investment than Nidec. However, John Bean Technologies is 2.48 times less risky than Nidec. It trades about 0.29 of its potential returns per unit of risk. Nidec is currently generating about -0.03 per unit of risk. If you would invest 11,142 in John Bean Technologies on September 1, 2024 and sell it today you would earn a total of 1,460 from holding John Bean Technologies or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. Nidec
Performance |
| Timeline |
| John Bean Technologies |
| Nidec |
John Bean and Nidec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and Nidec
The main advantage of trading using opposite John Bean and Nidec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, Nidec 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 Nidec will offset losses from the drop in Nidec's long position.| John Bean vs. Flowserve | John Bean vs. Franklin Electric Co | John Bean vs. ITT Inc | John Bean vs. IDEX Corporation |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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