Correlation Between Australian REIT and JFT Strategies

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

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

Diversification Opportunities for Australian REIT and JFT Strategies

0.0

Correlation Coefficient

Australian REIT  JFT Strategies

Pay attention - limited upside

The 3 months correlation between Australian and JFT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Australian REIT Income and JFT Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JFT Strategies and Australian REIT 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 Australian REIT Income 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 Australian REIT i.e., Australian REIT and JFT Strategies go up and down completely randomly.

Pair Corralation between Australian REIT and JFT Strategies

If you would invest  2,470  in JFT Strategies on October 11, 2024 and sell it today you would earn a total of  42.00  from holding JFT Strategies or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Australian REIT Income  vs.  JFT Strategies

Australian REIT Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian REIT Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Australian REIT is not utilizing all of its potentials. The newest stock price disturbance, 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 Australian REIT and JFT Strategies

The main advantage of trading using opposite Australian REIT and JFT Strategies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian REIT 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 Australian REIT Income 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.