Correlation Between Quaker Chemical and Jazz Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Jazz Pharmaceuticals 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 Quaker Chemical and Jazz Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Jazz Pharmaceuticals plc, you can compare the effects of market volatilities on Quaker Chemical and Jazz Pharmaceuticals 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 Quaker Chemical with a short position of Jazz Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Jazz Pharmaceuticals.
Diversification Opportunities for Quaker Chemical and Jazz Pharmaceuticals
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Quaker and Jazz is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Jazz Pharmaceuticals plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jazz Pharmaceuticals plc and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with Jazz Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jazz Pharmaceuticals plc has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Jazz Pharmaceuticals go up and down completely randomly.
Pair Corralation between Quaker Chemical and Jazz Pharmaceuticals
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the Jazz Pharmaceuticals. In addition to that, Quaker Chemical is 1.05 times more volatile than Jazz Pharmaceuticals plc. It trades about -0.02 of its total potential returns per unit of risk. Jazz Pharmaceuticals plc is currently generating about 0.0 per unit of volatility. If you would invest 12,875 in Jazz Pharmaceuticals plc on October 16, 2024 and sell it today you would lose (985.00) from holding Jazz Pharmaceuticals plc or give up 7.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Jazz Pharmaceuticals plc
Performance |
| Timeline |
| Quaker Chemical |
| Jazz Pharmaceuticals plc |
Quaker Chemical and Jazz Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Jazz Pharmaceuticals
The main advantage of trading using opposite Quaker Chemical and Jazz Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Jazz Pharmaceuticals 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 Jazz Pharmaceuticals will offset losses from the drop in Jazz Pharmaceuticals' long position.| Quaker Chemical vs. GWILLI FOOD | Quaker Chemical vs. Keck Seng Investments | Quaker Chemical vs. INDOFOOD AGRI RES | Quaker Chemical vs. CHRYSALIS INVESTMENTS LTD |
| Jazz Pharmaceuticals vs. SEKISUI CHEMICAL | Jazz Pharmaceuticals vs. OPERA SOFTWARE | Jazz Pharmaceuticals vs. Quaker Chemical | Jazz Pharmaceuticals vs. MAGIC SOFTWARE ENTR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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