Correlation Between Johns Lyng and Clime Investment
Can any of the company-specific risk be diversified away by investing in both Johns Lyng and Clime Investment 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 Johns Lyng and Clime Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johns Lyng Group and Clime Investment Management, you can compare the effects of market volatilities on Johns Lyng and Clime Investment 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 Johns Lyng with a short position of Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johns Lyng and Clime Investment.
Diversification Opportunities for Johns Lyng and Clime Investment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johns and Clime is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Johns Lyng Group and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man and Johns Lyng 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 Johns Lyng Group are associated (or correlated) with Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Johns Lyng i.e., Johns Lyng and Clime Investment go up and down completely randomly.
Pair Corralation between Johns Lyng and Clime Investment
Assuming the 90 days trading horizon Johns Lyng Group is expected to under-perform the Clime Investment. In addition to that, Johns Lyng is 1.13 times more volatile than Clime Investment Management. It trades about -0.02 of its total potential returns per unit of risk. Clime Investment Management is currently generating about -0.01 per unit of volatility. If you would invest 46.00 in Clime Investment Management on September 5, 2024 and sell it today you would lose (10.00) from holding Clime Investment Management or give up 21.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johns Lyng Group vs. Clime Investment Management
Performance |
| Timeline |
| Johns Lyng Group |
| Clime Investment Man |
Johns Lyng and Clime Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johns Lyng and Clime Investment
The main advantage of trading using opposite Johns Lyng and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johns Lyng position performs unexpectedly, Clime Investment 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 Clime Investment will offset losses from the drop in Clime Investment's long position.| Johns Lyng vs. Beston Global Food | Johns Lyng vs. 29Metals | Johns Lyng vs. Group 6 Metals | Johns Lyng vs. Aurelia Metals |
| Clime Investment vs. Westpac Banking | Clime Investment vs. Ecofibre | Clime Investment vs. Adriatic Metals Plc | Clime Investment vs. Australian Dairy Farms |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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