Correlation Between Johnson Matthey and Iofina Plc
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Iofina Plc 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 Iofina Plc 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 Iofina plc, you can compare the effects of market volatilities on Johnson Matthey and Iofina Plc 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 Iofina Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Iofina Plc.
Diversification Opportunities for Johnson Matthey and Iofina Plc
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Johnson and Iofina is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and Iofina plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iofina 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 Iofina Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iofina plc has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Iofina Plc go up and down completely randomly.
Pair Corralation between Johnson Matthey and Iofina Plc
Assuming the 90 days horizon Johnson Matthey PLC is expected to generate 0.59 times more return on investment than Iofina Plc. However, Johnson Matthey PLC is 1.7 times less risky than Iofina Plc. It trades about -0.03 of its potential returns per unit of risk. Iofina plc is currently generating about -0.02 per unit of risk. If you would invest 4,150 in Johnson Matthey PLC on August 29, 2024 and sell it today you would lose (800.00) from holding Johnson Matthey PLC or give up 19.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Matthey PLC vs. Iofina plc
Performance |
| Timeline |
| Johnson Matthey PLC |
| Iofina plc |
Johnson Matthey and Iofina Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and Iofina Plc
The main advantage of trading using opposite Johnson Matthey and Iofina Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, Iofina Plc 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 Iofina Plc will offset losses from the drop in Iofina Plc's long position.| Johnson Matthey vs. Sensient Technologies | Johnson Matthey vs. Koppers Holdings | Johnson Matthey vs. Axalta Coating Systems | Johnson Matthey vs. Select Energy Services |
| Iofina Plc vs. Akzo Nobel NV | Iofina Plc vs. Avoca LLC | Iofina Plc vs. Arkema SA ADR | Iofina Plc vs. HUMANA INC |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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