Correlation Between Aerofoam Metals and Juniata Valley

Can any of the company-specific risk be diversified away by investing in both Aerofoam Metals and Juniata Valley 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 Aerofoam Metals and Juniata Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aerofoam Metals and Juniata Valley Financial, you can compare the effects of market volatilities on Aerofoam Metals and Juniata Valley 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 Aerofoam Metals with a short position of Juniata Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerofoam Metals and Juniata Valley.

Diversification Opportunities for Aerofoam Metals and Juniata Valley

0.0

Correlation Coefficient

Aerofoam Metals  Juniata Valley

Pay attention - limited upside

The 3 months correlation between Aerofoam and Juniata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerofoam Metals and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial and Aerofoam Metals 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 Aerofoam Metals are associated (or correlated) with Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Aerofoam Metals i.e., Aerofoam Metals and Juniata Valley go up and down completely randomly.

Pair Corralation between Aerofoam Metals and Juniata Valley

Given the investment horizon of 90 days Aerofoam Metals is expected to generate 11.44 times more return on investment than Juniata Valley. However, Aerofoam Metals is 11.44 times more volatile than Juniata Valley Financial. It trades about 0.06 of its potential returns per unit of risk. Juniata Valley Financial is currently generating about 0.02 per unit of risk. If you would invest  0.00  in Aerofoam Metals on October 5, 2024 and sell it today you would earn a total of  0.01  from holding Aerofoam Metals or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	89.11%
Values	Daily Returns

Aerofoam Metals  vs.  Juniata Valley Financial

Aerofoam Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerofoam Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Aerofoam Metals is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Juniata Valley Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aerofoam Metals and Juniata Valley

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

The idea behind Aerofoam Metals and Juniata Valley Financial 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 Transaction History module to view history of all your transactions and understand their impact on performance.