Correlation Between DJ Mediaprint and Fertilizers

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

By analyzing existing cross correlation between DJ Mediaprint Logistics and Fertilizers and Chemicals, you can compare the effects of market volatilities on DJ Mediaprint and Fertilizers 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 DJ Mediaprint with a short position of Fertilizers. Check out your portfolio center. Please also check ongoing floating volatility patterns of DJ Mediaprint and Fertilizers.

Diversification Opportunities for DJ Mediaprint and Fertilizers

0.82

Correlation Coefficient

DJ Mediaprint  Fertilizers

Very poor diversification

The 3 months correlation between DJML and Fertilizers is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding DJ Mediaprint Logistics and Fertilizers and Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizers and Chemicals and DJ Mediaprint 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 DJ Mediaprint Logistics are associated (or correlated) with Fertilizers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizers and Chemicals has no effect on the direction of DJ Mediaprint i.e., DJ Mediaprint and Fertilizers go up and down completely randomly.

Pair Corralation between DJ Mediaprint and Fertilizers

Assuming the 90 days trading horizon DJ Mediaprint Logistics is expected to under-perform the Fertilizers. In addition to that, DJ Mediaprint is 1.25 times more volatile than Fertilizers and Chemicals. It trades about -0.11 of its total potential returns per unit of risk. Fertilizers and Chemicals is currently generating about -0.03 per unit of volatility. If you would invest  99,730  in Fertilizers and Chemicals on October 10, 2024 and sell it today you would lose (2,215) from holding Fertilizers and Chemicals or give up 2.22% of portfolio value over 90 days.

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

DJ Mediaprint Logistics  vs.  Fertilizers and Chemicals

DJ Mediaprint Logistics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DJ Mediaprint Logistics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, DJ Mediaprint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fertilizers and Chemicals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizers and Chemicals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Fertilizers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DJ Mediaprint and Fertilizers

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

The idea behind DJ Mediaprint Logistics and Fertilizers and Chemicals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.