Correlation Between Jupiter and MetFi
Can any of the company-specific risk be diversified away by investing in both Jupiter and MetFi 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 Jupiter and MetFi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jupiter and MetFi, you can compare the effects of market volatilities on Jupiter and MetFi 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 Jupiter with a short position of MetFi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jupiter and MetFi.
Diversification Opportunities for Jupiter and MetFi
Very good diversification
The 3 months correlation between Jupiter and MetFi is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jupiter and MetFi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetFi and Jupiter 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 Jupiter are associated (or correlated) with MetFi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetFi has no effect on the direction of Jupiter i.e., Jupiter and MetFi go up and down completely randomly.
Pair Corralation between Jupiter and MetFi
Assuming the 90 days trading horizon Jupiter is expected to generate 0.77 times more return on investment than MetFi. However, Jupiter is 1.3 times less risky than MetFi. It trades about 0.08 of its potential returns per unit of risk. MetFi is currently generating about 0.0 per unit of risk. If you would invest 96.00 in Jupiter on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Jupiter or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jupiter vs. MetFi
Performance |
| Timeline |
| Jupiter |
| MetFi |
Jupiter and MetFi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jupiter and MetFi
The main advantage of trading using opposite Jupiter and MetFi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jupiter position performs unexpectedly, MetFi 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 MetFi will offset losses from the drop in MetFi's long position.The idea behind Jupiter and MetFi 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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