Correlation Between JJill and Talen Energy
Can any of the company-specific risk be diversified away by investing in both JJill and Talen Energy 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 JJill and Talen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJill Inc and Talen Energy, you can compare the effects of market volatilities on JJill and Talen Energy 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 JJill with a short position of Talen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of JJill and Talen Energy.
Diversification Opportunities for JJill and Talen Energy
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JJill and Talen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JJill Inc and Talen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talen Energy and JJill 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 JJill Inc are associated (or correlated) with Talen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talen Energy has no effect on the direction of JJill i.e., JJill and Talen Energy go up and down completely randomly.
Pair Corralation between JJill and Talen Energy
Given the investment horizon of 90 days JJill is expected to generate 2.72 times less return on investment than Talen Energy. But when comparing it to its historical volatility, JJill Inc is 1.67 times less risky than Talen Energy. It trades about 0.09 of its potential returns per unit of risk. Talen Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 15,599 in Talen Energy on September 12, 2024 and sell it today you would earn a total of 5,474 from holding Talen Energy or generate 35.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJill Inc vs. Talen Energy
Performance |
| Timeline |
| JJill Inc |
| Talen Energy |
JJill and Talen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JJill and Talen Energy
The main advantage of trading using opposite JJill and Talen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JJill position performs unexpectedly, Talen Energy 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 Talen Energy will offset losses from the drop in Talen Energy's long position.The idea behind JJill Inc and Talen Energy 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.| Talen Energy vs. Microbot Medical | Talen Energy vs. Weyco Group | Talen Energy vs. Weibo Corp | Talen Energy vs. Morgan Stanley |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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