Correlation Between SportsHero and Jupiter Energy
Can any of the company-specific risk be diversified away by investing in both SportsHero and Jupiter Energy 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 SportsHero and Jupiter Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SportsHero and Jupiter Energy, you can compare the effects of market volatilities on SportsHero and Jupiter Energy 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 SportsHero with a short position of Jupiter Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SportsHero and Jupiter Energy.
Diversification Opportunities for SportsHero and Jupiter Energy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SportsHero and Jupiter is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SportsHero and Jupiter Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Energy and SportsHero 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 SportsHero are associated (or correlated) with Jupiter Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Energy has no effect on the direction of SportsHero i.e., SportsHero and Jupiter Energy go up and down completely randomly.
Pair Corralation between SportsHero and Jupiter Energy
Assuming the 90 days trading horizon SportsHero is expected to generate 1.87 times more return on investment than Jupiter Energy. However, SportsHero is 1.87 times more volatile than Jupiter Energy. It trades about 0.25 of its potential returns per unit of risk. Jupiter Energy is currently generating about 0.17 per unit of risk. If you would invest 1.40 in SportsHero on August 29, 2024 and sell it today you would earn a total of 0.40 from holding SportsHero or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SportsHero vs. Jupiter Energy
Performance |
| Timeline |
| SportsHero |
| Jupiter Energy |
SportsHero and Jupiter Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SportsHero and Jupiter Energy
The main advantage of trading using opposite SportsHero and Jupiter Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SportsHero position performs unexpectedly, Jupiter Energy 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 Jupiter Energy will offset losses from the drop in Jupiter Energy's long position.| SportsHero vs. PVW Resources | SportsHero vs. Woolworths | SportsHero vs. Wesfarmers | SportsHero vs. Coles Group |
| Jupiter Energy vs. BlackWall Property Funds | Jupiter Energy vs. Australian Unity Office | Jupiter Energy vs. Garda Diversified Ppty | Jupiter Energy vs. Pinnacle Investment Management |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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