Correlation Between Johnson Matthey and Triad Group

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Triad 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 Johnson Matthey and Triad Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Matthey PLC and Triad Group PLC, you can compare the effects of market volatilities on Johnson Matthey and Triad 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 Johnson Matthey with a short position of Triad Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Triad Group.

Diversification Opportunities for Johnson Matthey and Triad Group

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Johnson and Triad is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and Triad Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Group PLC and Johnson Matthey 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 Johnson Matthey PLC are associated (or correlated) with Triad Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Group PLC has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Triad Group go up and down completely randomly.

Pair Corralation between Johnson Matthey and Triad Group

Assuming the 90 days trading horizon Johnson Matthey PLC is expected to generate 2.09 times more return on investment than Triad Group. However, Johnson Matthey is 2.09 times more volatile than Triad Group PLC. It trades about -0.16 of its potential returns per unit of risk. Triad Group PLC is currently generating about -0.5 per unit of risk. If you would invest  148,537  in Johnson Matthey PLC on September 24, 2024 and sell it today you would lose (14,937) from holding Johnson Matthey PLC or give up 10.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Johnson Matthey PLC  vs.  Triad Group PLC

 Performance 
       Timeline  
Johnson Matthey PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Johnson Matthey PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Triad Group PLC 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Johnson Matthey and Triad Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Johnson Matthey and Triad Group

The main advantage of trading using opposite Johnson Matthey and Triad Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, Triad 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 Triad Group will offset losses from the drop in Triad Group's long position.
The idea behind Johnson Matthey PLC and Triad Group PLC 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.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

Other Complementary Tools

Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Transaction History
View history of all your transactions and understand their impact on performance
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities