Correlation Between TRON and JAR
Can any of the company-specific risk be diversified away by investing in both TRON and JAR 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 TRON and JAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and JAR, you can compare the effects of market volatilities on TRON and JAR 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 TRON with a short position of JAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and JAR.
Diversification Opportunities for TRON and JAR
Modest diversification
The 3 months correlation between TRON and JAR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding TRON and JAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAR and TRON 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 TRON are associated (or correlated) with JAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAR has no effect on the direction of TRON i.e., TRON and JAR go up and down completely randomly.
Pair Corralation between TRON and JAR
Assuming the 90 days trading horizon TRON is expected to generate 2.06 times more return on investment than JAR. However, TRON is 2.06 times more volatile than JAR. It trades about 0.02 of its potential returns per unit of risk. JAR is currently generating about -0.19 per unit of risk. If you would invest 24.00 in TRON on November 18, 2024 and sell it today you would earn a total of 0.00 from holding TRON or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRON vs. JAR
Performance |
| Timeline |
| TRON |
| JAR |
TRON and JAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and JAR
The main advantage of trading using opposite TRON and JAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, JAR 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 JAR will offset losses from the drop in JAR's long position.The idea behind TRON and JAR 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |