Correlation Between 90331HPL1 and JEFFERIES

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Can any of the company-specific risk be diversified away by investing in both 90331HPL1 and JEFFERIES 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 90331HPL1 and JEFFERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US BANK NATIONAL and JEFFERIES GROUP INC, you can compare the effects of market volatilities on 90331HPL1 and JEFFERIES 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 90331HPL1 with a short position of JEFFERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90331HPL1 and JEFFERIES.

Diversification Opportunities for 90331HPL1 and JEFFERIES

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between 90331HPL1 and JEFFERIES is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding US BANK NATIONAL and JEFFERIES GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JEFFERIES GROUP INC and 90331HPL1 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 US BANK NATIONAL are associated (or correlated) with JEFFERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JEFFERIES GROUP INC has no effect on the direction of 90331HPL1 i.e., 90331HPL1 and JEFFERIES go up and down completely randomly.

Pair Corralation between 90331HPL1 and JEFFERIES

Assuming the 90 days trading horizon US BANK NATIONAL is expected to generate 0.89 times more return on investment than JEFFERIES. However, US BANK NATIONAL is 1.13 times less risky than JEFFERIES. It trades about 0.02 of its potential returns per unit of risk. JEFFERIES GROUP INC is currently generating about 0.02 per unit of risk. If you would invest  9,632  in US BANK NATIONAL on September 4, 2024 and sell it today you would earn a total of  121.00  from holding US BANK NATIONAL or generate 1.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy71.49%
ValuesDaily Returns

US BANK NATIONAL  vs.  JEFFERIES GROUP INC

 Performance 
       Timeline  
US BANK NATIONAL 

Risk-Adjusted Performance

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Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 90331HPL1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
JEFFERIES GROUP INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JEFFERIES GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JEFFERIES is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

90331HPL1 and JEFFERIES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 90331HPL1 and JEFFERIES

The main advantage of trading using opposite 90331HPL1 and JEFFERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90331HPL1 position performs unexpectedly, JEFFERIES 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 JEFFERIES will offset losses from the drop in JEFFERIES's long position.
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The idea behind US BANK NATIONAL and JEFFERIES GROUP INC 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.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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