Correlation Between Spirent Communications and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Jacquet Metal 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 Spirent Communications and Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Jacquet Metal Service, you can compare the effects of market volatilities on Spirent Communications and Jacquet Metal 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 Spirent Communications with a short position of Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Jacquet Metal.
Diversification Opportunities for Spirent Communications and Jacquet Metal
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and Jacquet is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Spirent Communications i.e., Spirent Communications and Jacquet Metal go up and down completely randomly.
Pair Corralation between Spirent Communications and Jacquet Metal
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.55 times more return on investment than Jacquet Metal. However, Spirent Communications plc is 1.82 times less risky than Jacquet Metal. It trades about 0.05 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.03 per unit of risk. If you would invest 16,980 in Spirent Communications plc on September 2, 2024 and sell it today you would earn a total of 150.00 from holding Spirent Communications plc or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Jacquet Metal Service
Performance |
| Timeline |
| Spirent Communications |
| Jacquet Metal Service |
Spirent Communications and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Jacquet Metal
The main advantage of trading using opposite Spirent Communications and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Hyundai Motor | Spirent Communications vs. Toyota Motor Corp |
| Jacquet Metal vs. Zurich Insurance Group | Jacquet Metal vs. TR Property Investment | Jacquet Metal vs. Verizon Communications | Jacquet Metal vs. Air Products Chemicals |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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