Correlation Between Donnelley Financial and PJT Partners

Can any of the company-specific risk be diversified away by investing in both Donnelley Financial and PJT Partners 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 Donnelley Financial and PJT Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Donnelley Financial and PJT Partners

0.69

Correlation Coefficient

Donnelley Financial  PJT Partners

Poor diversification

The 3 months correlation between Donnelley and PJT is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Donnelley Financial Solutions and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners and Donnelley Financial 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 Donnelley Financial Solutions are associated (or correlated) with PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Donnelley Financial i.e., Donnelley Financial and PJT Partners go up and down completely randomly.

Pair Corralation between Donnelley Financial and PJT Partners

Given the investment horizon of 90 days Donnelley Financial Solutions is expected to under-perform the PJT Partners. In addition to that, Donnelley Financial is 1.71 times more volatile than PJT Partners. It trades about -0.15 of its total potential returns per unit of risk. PJT Partners is currently generating about -0.08 per unit of volatility. If you would invest  15,686  in PJT Partners on December 29, 2024 and sell it today you would lose (1,694) from holding PJT Partners or give up 10.8% of portfolio value over 90 days.

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

Donnelley Financial Solutions  vs.  PJT Partners

Donnelley Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Donnelley Financial Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

PJT Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days PJT Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Donnelley Financial and PJT Partners

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

The idea behind Donnelley Financial Solutions and PJT Partners 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.