Correlation Between Origin Materials and Joby Aviation
Can any of the company-specific risk be diversified away by investing in both Origin Materials and Joby Aviation 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 Origin Materials and Joby Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials Warrant and Joby Aviation, you can compare the effects of market volatilities on Origin Materials and Joby Aviation 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 Origin Materials with a short position of Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Joby Aviation.
Diversification Opportunities for Origin Materials and Joby Aviation
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Origin and Joby is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials Warrant and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation and Origin Materials 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 Origin Materials Warrant are associated (or correlated) with Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Origin Materials i.e., Origin Materials and Joby Aviation go up and down completely randomly.
Pair Corralation between Origin Materials and Joby Aviation
Assuming the 90 days horizon Origin Materials is expected to generate 3.0 times less return on investment than Joby Aviation. But when comparing it to its historical volatility, Origin Materials Warrant is 1.08 times less risky than Joby Aviation. It trades about 0.07 of its potential returns per unit of risk. Joby Aviation is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 59.00 in Joby Aviation on August 28, 2024 and sell it today you would earn a total of 139.00 from holding Joby Aviation or generate 235.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Materials Warrant vs. Joby Aviation
Performance |
| Timeline |
| Origin Materials Warrant |
| Joby Aviation |
Origin Materials and Joby Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and Joby Aviation
The main advantage of trading using opposite Origin Materials and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation's long position.The idea behind Origin Materials Warrant and Joby Aviation 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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