Correlation Between Spotify Technology and Jupiter Fund

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

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

Diversification Opportunities for Spotify Technology and Jupiter Fund

-0.35

Correlation Coefficient

Spotify Technology  Jupiter Fund

Very good diversification

The 3 months correlation between Spotify and Jupiter is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA 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 Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Jupiter Fund go up and down completely randomly.

Pair Corralation between Spotify Technology and Jupiter Fund

Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.35 times more return on investment than Jupiter Fund. However, Spotify Technology is 1.35 times more volatile than Jupiter Fund Management. It trades about 0.15 of its potential returns per unit of risk. Jupiter Fund Management is currently generating about -0.08 per unit of risk. If you would invest  43,190  in Spotify Technology SA on December 25, 2024 and sell it today you would earn a total of  12,830  from holding Spotify Technology SA or generate 29.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Spotify Technology SA  vs.  Jupiter Fund Management

Spotify Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jupiter Fund Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jupiter Fund Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Spotify Technology and Jupiter Fund

The main advantage of trading using opposite Spotify Technology and Jupiter Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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 Spotify Technology SA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.