Correlation Between JLEN Environmental and Baker Steel
Can any of the company-specific risk be diversified away by investing in both JLEN Environmental and Baker Steel 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 Baker Steel 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 Baker Steel Resources, you can compare the effects of market volatilities on JLEN Environmental and Baker Steel 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 Baker Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and Baker Steel.
Diversification Opportunities for JLEN Environmental and Baker Steel
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JLEN and Baker is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources 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 Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of JLEN Environmental i.e., JLEN Environmental and Baker Steel go up and down completely randomly.
Pair Corralation between JLEN Environmental and Baker Steel
Assuming the 90 days trading horizon JLEN Environmental Assets is expected to under-perform the Baker Steel. But the stock apears to be less risky and, when comparing its historical volatility, JLEN Environmental Assets is 1.65 times less risky than Baker Steel. The stock trades about -0.25 of its potential returns per unit of risk. The Baker Steel Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Baker Steel Resources on August 31, 2024 and sell it today you would earn a total of 750.00 from holding Baker Steel Resources or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JLEN Environmental Assets vs. Baker Steel Resources
Performance |
| Timeline |
| JLEN Environmental Assets |
| Baker Steel Resources |
JLEN Environmental and Baker Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLEN Environmental and Baker Steel
The main advantage of trading using opposite JLEN Environmental and Baker Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLEN Environmental position performs unexpectedly, Baker Steel 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 Baker Steel will offset losses from the drop in Baker Steel's long position.| JLEN Environmental vs. Playtech Plc | JLEN Environmental vs. Raytheon Technologies Corp | JLEN Environmental vs. Uber Technologies | JLEN Environmental vs. Worldwide Healthcare Trust |
| Baker Steel vs. One Media iP | Baker Steel vs. Associated British Foods | Baker Steel vs. Hollywood Bowl Group | Baker Steel vs. Liberty Media Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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