Correlation Between Guardian Investment and JFT Strategies

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

By analyzing existing cross correlation between Guardian Investment Grade and JFT Strategies, you can compare the effects of market volatilities on Guardian Investment and JFT Strategies 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 Guardian Investment with a short position of JFT Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Investment and JFT Strategies.

Diversification Opportunities for Guardian Investment and JFT Strategies

0.19

Correlation Coefficient

Guardian Investment  JFT Strategies

Average diversification

The 3 months correlation between Guardian and JFT is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Investment Grade and JFT Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JFT Strategies and Guardian Investment 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 Guardian Investment Grade are associated (or correlated) with JFT Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JFT Strategies has no effect on the direction of Guardian Investment i.e., Guardian Investment and JFT Strategies go up and down completely randomly.

Pair Corralation between Guardian Investment and JFT Strategies

Assuming the 90 days trading horizon Guardian Investment Grade is expected to generate 0.35 times more return on investment than JFT Strategies. However, Guardian Investment Grade is 2.85 times less risky than JFT Strategies. It trades about 0.06 of its potential returns per unit of risk. JFT Strategies is currently generating about -0.03 per unit of risk. If you would invest  2,126  in Guardian Investment Grade on October 26, 2024 and sell it today you would earn a total of  23.00  from holding Guardian Investment Grade or generate 1.08% return on investment over 90 days.

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

Guardian Investment Grade  vs.  JFT Strategies

Guardian Investment Grade

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Investment Grade are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Guardian Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

JFT Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JFT Strategies has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, JFT Strategies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guardian Investment and JFT Strategies

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

The idea behind Guardian Investment Grade and JFT Strategies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.