Correlation Between Jensen and Econocom Group
Can any of the company-specific risk be diversified away by investing in both Jensen and Econocom Group 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 Jensen and Econocom Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jensen Group and Econocom Group SANV, you can compare the effects of market volatilities on Jensen and Econocom Group 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 Jensen with a short position of Econocom Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jensen and Econocom Group.
Diversification Opportunities for Jensen and Econocom Group
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jensen and Econocom is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jensen Group and Econocom Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Econocom Group SANV and Jensen 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 Jensen Group are associated (or correlated) with Econocom Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Econocom Group SANV has no effect on the direction of Jensen i.e., Jensen and Econocom Group go up and down completely randomly.
Pair Corralation between Jensen and Econocom Group
Assuming the 90 days trading horizon Jensen Group is expected to generate 0.71 times more return on investment than Econocom Group. However, Jensen Group is 1.41 times less risky than Econocom Group. It trades about 0.08 of its potential returns per unit of risk. Econocom Group SANV is currently generating about -0.01 per unit of risk. If you would invest 3,148 in Jensen Group on August 29, 2024 and sell it today you would earn a total of 1,152 from holding Jensen Group or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
Jensen Group vs. Econocom Group SANV
Performance |
| Timeline |
| Jensen Group |
| Econocom Group SANV |
Jensen and Econocom Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jensen and Econocom Group
The main advantage of trading using opposite Jensen and Econocom Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen position performs unexpectedly, Econocom Group 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 Econocom Group will offset losses from the drop in Econocom Group's long position.The idea behind Jensen Group and Econocom Group SANV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Econocom Group vs. NV Bekaert SA | Econocom Group vs. EVS Broadcast Equipment | Econocom Group vs. Ontex Group NV | Econocom Group vs. Tessenderlo |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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