Correlation Between JLEN Environmental and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both JLEN Environmental and Verizon Communications 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 JLEN Environmental and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLEN Environmental Assets and Verizon Communications, you can compare the effects of market volatilities on JLEN Environmental and Verizon Communications 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 JLEN Environmental with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and Verizon Communications.
Diversification Opportunities for JLEN Environmental and Verizon Communications
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JLEN and Verizon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and JLEN Environmental 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 JLEN Environmental Assets are associated (or correlated) with Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and Verizon Communications go up and down completely randomly.
Pair Corralation between JLEN Environmental and Verizon Communications
Assuming the 90 days trading horizon JLEN Environmental Assets is expected to under-perform the Verizon Communications. But the stock apears to be less risky and, when comparing its historical volatility, JLEN Environmental Assets is 1.1 times less risky than Verizon Communications. The stock trades about -0.24 of its potential returns per unit of risk. The Verizon Communications is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,188 in Verizon Communications on September 2, 2024 and sell it today you would earn a total of 257.00 from holding Verizon Communications or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
JLEN Environmental Assets vs. Verizon Communications
Performance |
| Timeline |
| JLEN Environmental Assets |
| Verizon Communications |
JLEN Environmental and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLEN Environmental and Verizon Communications
The main advantage of trading using opposite JLEN Environmental and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLEN Environmental position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Toyota Motor Corp | JLEN Environmental vs. Reliance Industries Ltd |
| Verizon Communications vs. Uniper SE | Verizon Communications vs. Mulberry Group PLC | Verizon Communications vs. London Security Plc | Verizon Communications vs. Triad Group PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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