Correlation Between Fredonia Mining and Jamieson Wellness

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

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

Diversification Opportunities for Fredonia Mining and Jamieson Wellness

-0.32

Correlation Coefficient

Fredonia Mining  Jamieson Wellness

Very good diversification

The 3 months correlation between Fredonia and Jamieson is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fredonia Mining and Jamieson Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamieson Wellness and Fredonia Mining 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 Fredonia Mining are associated (or correlated) with Jamieson Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamieson Wellness has no effect on the direction of Fredonia Mining i.e., Fredonia Mining and Jamieson Wellness go up and down completely randomly.

Pair Corralation between Fredonia Mining and Jamieson Wellness

Assuming the 90 days trading horizon Fredonia Mining is expected to generate 7.18 times more return on investment than Jamieson Wellness. However, Fredonia Mining is 7.18 times more volatile than Jamieson Wellness. It trades about 0.05 of its potential returns per unit of risk. Jamieson Wellness is currently generating about 0.06 per unit of risk. If you would invest  26.00  in Fredonia Mining on October 5, 2024 and sell it today you would lose (2.00) from holding Fredonia Mining or give up 7.69% of portfolio value over 90 days.

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

Fredonia Mining  vs.  Jamieson Wellness

Fredonia Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fredonia Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Fredonia Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Jamieson Wellness

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jamieson Wellness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Jamieson Wellness may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fredonia Mining and Jamieson Wellness

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

The idea behind Fredonia Mining and Jamieson Wellness 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.