Correlation Between TRADEGATE and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both TRADEGATE and Johnson Controls 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 TRADEGATE and Johnson Controls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and Johnson Controls International, you can compare the effects of market volatilities on TRADEGATE and Johnson Controls 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 TRADEGATE with a short position of Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and Johnson Controls.
Diversification Opportunities for TRADEGATE and Johnson Controls
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TRADEGATE and Johnson is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int and TRADEGATE 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 TRADEGATE are associated (or correlated) with Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of TRADEGATE i.e., TRADEGATE and Johnson Controls go up and down completely randomly.
Pair Corralation between TRADEGATE and Johnson Controls
Assuming the 90 days trading horizon TRADEGATE is expected to generate 0.13 times more return on investment than Johnson Controls. However, TRADEGATE is 7.6 times less risky than Johnson Controls. It trades about 0.03 of its potential returns per unit of risk. Johnson Controls International is currently generating about -0.03 per unit of risk. If you would invest 9,000 in TRADEGATE on December 11, 2024 and sell it today you would earn a total of 50.00 from holding TRADEGATE or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRADEGATE vs. Johnson Controls International
Performance |
| Timeline |
| TRADEGATE |
| Johnson Controls Int |
TRADEGATE and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and Johnson Controls
The main advantage of trading using opposite TRADEGATE and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.The idea behind TRADEGATE and Johnson Controls International 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.| Johnson Controls vs. MUTUIONLINE | Johnson Controls vs. Lamar Advertising | Johnson Controls vs. Vishay Intertechnology | Johnson Controls vs. Easy Software AG |
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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