Correlation Between Acadia Realty and Jazz Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Acadia Realty and Jazz Pharmaceuticals 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 Acadia Realty and Jazz Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Realty Trust and Jazz Pharmaceuticals plc, you can compare the effects of market volatilities on Acadia Realty and Jazz Pharmaceuticals 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 Acadia Realty with a short position of Jazz Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Realty and Jazz Pharmaceuticals.
Diversification Opportunities for Acadia Realty and Jazz Pharmaceuticals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acadia and Jazz is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and Jazz Pharmaceuticals plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jazz Pharmaceuticals plc and Acadia Realty 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 Acadia Realty Trust are associated (or correlated) with Jazz Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jazz Pharmaceuticals plc has no effect on the direction of Acadia Realty i.e., Acadia Realty and Jazz Pharmaceuticals go up and down completely randomly.
Pair Corralation between Acadia Realty and Jazz Pharmaceuticals
Assuming the 90 days horizon Acadia Realty is expected to generate 41.58 times less return on investment than Jazz Pharmaceuticals. But when comparing it to its historical volatility, Acadia Realty Trust is 1.68 times less risky than Jazz Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Jazz Pharmaceuticals plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 10,150 in Jazz Pharmaceuticals plc on October 14, 2024 and sell it today you would earn a total of 1,655 from holding Jazz Pharmaceuticals plc or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Realty Trust vs. Jazz Pharmaceuticals plc
Performance |
| Timeline |
| Acadia Realty Trust |
| Jazz Pharmaceuticals plc |
Acadia Realty and Jazz Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Realty and Jazz Pharmaceuticals
The main advantage of trading using opposite Acadia Realty and Jazz Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Realty position performs unexpectedly, Jazz Pharmaceuticals 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 Jazz Pharmaceuticals will offset losses from the drop in Jazz Pharmaceuticals' long position.| Acadia Realty vs. Superior Plus Corp | Acadia Realty vs. NMI Holdings | Acadia Realty vs. SIVERS SEMICONDUCTORS AB | Acadia Realty vs. Talanx AG |
| Jazz Pharmaceuticals vs. T MOBILE INCDL 00001 | Jazz Pharmaceuticals vs. Shenandoah Telecommunications | Jazz Pharmaceuticals vs. TELECOM ITALIA | Jazz Pharmaceuticals vs. Charter Communications |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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