Correlation Between Jacquet Metal and Trane Technologies

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

By analyzing existing cross correlation between Jacquet Metal Service and Trane Technologies plc, you can compare the effects of market volatilities on Jacquet Metal and Trane Technologies 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 Jacquet Metal with a short position of Trane Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and Trane Technologies.

Diversification Opportunities for Jacquet Metal and Trane Technologies

-0.38

Correlation Coefficient

Jacquet Metal  Trane Technologies

Very good diversification

The 3 months correlation between Jacquet and Trane is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies plc and Jacquet Metal 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 Jacquet Metal Service are associated (or correlated) with Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of Jacquet Metal i.e., Jacquet Metal and Trane Technologies go up and down completely randomly.

Pair Corralation between Jacquet Metal and Trane Technologies

Assuming the 90 days horizon Jacquet Metal Service is expected to generate 0.96 times more return on investment than Trane Technologies. However, Jacquet Metal Service is 1.04 times less risky than Trane Technologies. It trades about 0.1 of its potential returns per unit of risk. Trane Technologies plc is currently generating about 0.03 per unit of risk. If you would invest  1,586  in Jacquet Metal Service on October 5, 2024 and sell it today you would earn a total of  134.00  from holding Jacquet Metal Service or generate 8.45% return on investment over 90 days.

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

Jacquet Metal Service  vs.  Trane Technologies plc

Jacquet Metal Service

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Jacquet Metal Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Jacquet Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Trane Technologies plc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Trane Technologies plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Trane Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jacquet Metal and Trane Technologies

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

The idea behind Jacquet Metal Service and Trane Technologies plc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.