Correlation Between Simpson Manufacturing and JetAI
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing and JetAI 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 Simpson Manufacturing and JetAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and JetAI Inc, you can compare the effects of market volatilities on Simpson Manufacturing and JetAI 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 Simpson Manufacturing with a short position of JetAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and JetAI.
Diversification Opportunities for Simpson Manufacturing and JetAI
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Simpson and JetAI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and JetAI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetAI Inc and Simpson Manufacturing 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 Simpson Manufacturing are associated (or correlated) with JetAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JetAI Inc has no effect on the direction of Simpson Manufacturing i.e., Simpson Manufacturing and JetAI go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and JetAI
Considering the 90-day investment horizon Simpson Manufacturing is expected to generate 0.23 times more return on investment than JetAI. However, Simpson Manufacturing is 4.38 times less risky than JetAI. It trades about 0.07 of its potential returns per unit of risk. JetAI Inc is currently generating about -0.26 per unit of risk. If you would invest 16,177 in Simpson Manufacturing on September 2, 2024 and sell it today you would earn a total of 2,663 from holding Simpson Manufacturing or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simpson Manufacturing vs. JetAI Inc
Performance |
| Timeline |
| Simpson Manufacturing |
| JetAI Inc |
Simpson Manufacturing and JetAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simpson Manufacturing and JetAI
The main advantage of trading using opposite Simpson Manufacturing and JetAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing position performs unexpectedly, JetAI 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 JetAI will offset losses from the drop in JetAI's long position.| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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