Correlation Between Astar and Johnson Institutional
Can any of the company-specific risk be diversified away by investing in both Astar and Johnson Institutional 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 Astar and Johnson Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Johnson Institutional E, you can compare the effects of market volatilities on Astar and Johnson Institutional 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 Astar with a short position of Johnson Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Johnson Institutional.
Diversification Opportunities for Astar and Johnson Institutional
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Astar and Johnson is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Johnson Institutional E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Institutional and Astar 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 Astar are associated (or correlated) with Johnson Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Institutional has no effect on the direction of Astar i.e., Astar and Johnson Institutional go up and down completely randomly.
Pair Corralation between Astar and Johnson Institutional
Assuming the 90 days trading horizon Astar is expected to generate 14.71 times more return on investment than Johnson Institutional. However, Astar is 14.71 times more volatile than Johnson Institutional E. It trades about 0.01 of its potential returns per unit of risk. Johnson Institutional E is currently generating about -0.03 per unit of risk. If you would invest 5.65 in Astar on October 27, 2024 and sell it today you would lose (0.41) from holding Astar or give up 7.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 93.75% |
Values | Daily Returns |
Astar vs. Johnson Institutional E
Performance |
Timeline |
Astar |
Johnson Institutional |
Astar and Johnson Institutional Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Astar and Johnson Institutional
The main advantage of trading using opposite Astar and Johnson Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Johnson Institutional 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 Johnson Institutional will offset losses from the drop in Johnson Institutional's long position.The idea behind Astar and Johnson Institutional E 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.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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