Correlation Between John Bean and Small Cap
Can any of the company-specific risk be diversified away by investing in both John Bean and Small Cap 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 Small Cap 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 Small Cap Core, you can compare the effects of market volatilities on John Bean and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Small Cap.
Diversification Opportunities for John Bean and Small Cap
Poor diversification
The 3 months correlation between John and Small is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of John Bean i.e., John Bean and Small Cap go up and down completely randomly.
Pair Corralation between John Bean and Small Cap
Considering the 90-day investment horizon John Bean Technologies is expected to generate 1.82 times more return on investment than Small Cap. However, John Bean is 1.82 times more volatile than Small Cap Core. It trades about 0.09 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.07 per unit of risk. If you would invest 9,335 in John Bean Technologies on August 24, 2024 and sell it today you would earn a total of 2,583 from holding John Bean Technologies or generate 27.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. Small Cap Core
Performance |
| Timeline |
| John Bean Technologies |
| Small Cap Core |
John Bean and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and Small Cap
The main advantage of trading using opposite John Bean and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| John Bean vs. Small Cap Core | John Bean vs. Freedom Holding Corp | John Bean vs. Gfl Environmental Holdings | John Bean vs. Growth Fund Of |
| Small Cap vs. Vanguard Mid Cap Index | Small Cap vs. Vanguard Total Bond | Small Cap vs. Vanguard Institutional Index | Small Cap vs. Vanguard Total International |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |