Correlation Between BBB Foods and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Jiangsu Expressway 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 BBB Foods and Jiangsu Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Jiangsu Expressway Co, you can compare the effects of market volatilities on BBB Foods and Jiangsu Expressway 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 BBB Foods with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Jiangsu Expressway.
Diversification Opportunities for BBB Foods and Jiangsu Expressway
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BBB and Jiangsu is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Jiangsu Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and BBB Foods 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 BBB Foods are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of BBB Foods i.e., BBB Foods and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between BBB Foods and Jiangsu Expressway
Given the investment horizon of 90 days BBB Foods is expected to under-perform the Jiangsu Expressway. In addition to that, BBB Foods is 1.05 times more volatile than Jiangsu Expressway Co. It trades about -0.2 of its total potential returns per unit of risk. Jiangsu Expressway Co is currently generating about 0.02 per unit of volatility. If you would invest 2,095 in Jiangsu Expressway Co on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Jiangsu Expressway Co or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Jiangsu Expressway Co
Performance |
| Timeline |
| BBB Foods |
| Jiangsu Expressway |
BBB Foods and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Jiangsu Expressway
The main advantage of trading using opposite BBB Foods and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway's long position.| BBB Foods vs. BJs Wholesale Club | BBB Foods vs. Dollar General | BBB Foods vs. Dollar Tree | BBB Foods vs. Target |
| Jiangsu Expressway vs. Verra Mobility Corp | Jiangsu Expressway vs. HUMANA INC | Jiangsu Expressway vs. Aquagold International | Jiangsu Expressway vs. Barloworld Ltd ADR |
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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