Correlation Between Daily Journal and ReposiTrak

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

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

Diversification Opportunities for Daily Journal and ReposiTrak

0.81

Correlation Coefficient

Daily Journal  ReposiTrak

Very poor diversification

The 3 months correlation between Daily and ReposiTrak is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and ReposiTrak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReposiTrak and Daily Journal 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 Daily Journal Corp are associated (or correlated) with ReposiTrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReposiTrak has no effect on the direction of Daily Journal i.e., Daily Journal and ReposiTrak go up and down completely randomly.

Pair Corralation between Daily Journal and ReposiTrak

Given the investment horizon of 90 days Daily Journal is expected to generate 2.54 times less return on investment than ReposiTrak. But when comparing it to its historical volatility, Daily Journal Corp is 1.13 times less risky than ReposiTrak. It trades about 0.05 of its potential returns per unit of risk. ReposiTrak is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  574.00  in ReposiTrak on October 23, 2024 and sell it today you would earn a total of  1,569  from holding ReposiTrak or generate 273.34% return on investment over 90 days.

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

Daily Journal Corp  vs.  ReposiTrak

Daily Journal Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daily Journal Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Daily Journal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ReposiTrak

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ReposiTrak are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ReposiTrak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daily Journal and ReposiTrak

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

The idea behind Daily Journal Corp and ReposiTrak 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..