Correlation Between Waste Management and Jupiter Fund

Can any of the company-specific risk be diversified away by investing in both Waste Management and Jupiter Fund 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 Waste Management and Jupiter Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Waste Management and Jupiter Fund Management, you can compare the effects of market volatilities on Waste Management and Jupiter Fund 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 Waste Management with a short position of Jupiter Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Jupiter Fund.

Diversification Opportunities for Waste Management and Jupiter Fund

-0.41

Correlation Coefficient

Waste Management  Jupiter Fund

Very good diversification

The 3 months correlation between Waste and Jupiter is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Jupiter Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Fund Management and Waste Management 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 Waste Management are associated (or correlated) with Jupiter Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Fund Management has no effect on the direction of Waste Management i.e., Waste Management and Jupiter Fund go up and down completely randomly.

Pair Corralation between Waste Management and Jupiter Fund

Assuming the 90 days trading horizon Waste Management is expected to generate 1.06 times less return on investment than Jupiter Fund. But when comparing it to its historical volatility, Waste Management is 1.24 times less risky than Jupiter Fund. It trades about 0.05 of its potential returns per unit of risk. Jupiter Fund Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,170  in Jupiter Fund Management on September 13, 2024 and sell it today you would earn a total of  280.00  from holding Jupiter Fund Management or generate 3.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Waste Management  vs.  Jupiter Fund Management

Waste Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Waste Management is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jupiter Fund Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter Fund Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Jupiter Fund is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Waste Management and Jupiter Fund

The main advantage of trading using opposite Waste Management and Jupiter Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Jupiter Fund 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 Jupiter Fund will offset losses from the drop in Jupiter Fund's long position.

The idea behind Waste Management and Jupiter Fund Management 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.