Correlation Between Technology Select and JIB
Can any of the company-specific risk be diversified away by investing in both Technology Select and JIB 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 Technology Select and JIB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and JIB, you can compare the effects of market volatilities on Technology Select and JIB 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 Technology Select with a short position of JIB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and JIB.
Diversification Opportunities for Technology Select and JIB
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Technology and JIB is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and JIB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JIB and Technology Select 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 Technology Select Sector are associated (or correlated) with JIB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JIB has no effect on the direction of Technology Select i.e., Technology Select and JIB go up and down completely randomly.
Pair Corralation between Technology Select and JIB
Considering the 90-day investment horizon Technology Select Sector is expected to generate 3.67 times more return on investment than JIB. However, Technology Select is 3.67 times more volatile than JIB. It trades about 0.1 of its potential returns per unit of risk. JIB is currently generating about 0.01 per unit of risk. If you would invest 12,745 in Technology Select Sector on August 28, 2024 and sell it today you would earn a total of 10,614 from holding Technology Select Sector or generate 83.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.45% |
| Values | Daily Returns |
Technology Select Sector vs. JIB
Performance |
| Timeline |
| Technology Select Sector |
| JIB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Technology Select and JIB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and JIB
The main advantage of trading using opposite Technology Select and JIB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, JIB 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 JIB will offset losses from the drop in JIB's long position.| Technology Select vs. First Trust Exchange Traded | Technology Select vs. Ultimus Managers Trust | Technology Select vs. Horizon Kinetics Medical | Technology Select vs. Harbor Health Care |
| JIB vs. iShares MSCI EAFE | JIB vs. iShares iBoxx Investment | JIB vs. iShares TIPS Bond | JIB vs. iShares 1 3 Year |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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