Correlation Between Jacquet Metal and NRG ENERGY

Can any of the company-specific risk be diversified away by investing in both Jacquet Metal and NRG ENERGY 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 NRG ENERGY 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 NRG ENERGY, you can compare the effects of market volatilities on Jacquet Metal and NRG ENERGY 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 NRG ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and NRG ENERGY.

Diversification Opportunities for Jacquet Metal and NRG ENERGY

-0.55

Correlation Coefficient

Jacquet Metal  NRG ENERGY

Excellent diversification

The 3 months correlation between Jacquet and NRG is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and NRG ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG ENERGY 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 NRG ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG ENERGY has no effect on the direction of Jacquet Metal i.e., Jacquet Metal and NRG ENERGY go up and down completely randomly.

Pair Corralation between Jacquet Metal and NRG ENERGY

Assuming the 90 days horizon Jacquet Metal Service is expected to generate 0.67 times more return on investment than NRG ENERGY. However, Jacquet Metal Service is 1.49 times less risky than NRG ENERGY. It trades about 0.14 of its potential returns per unit of risk. NRG ENERGY is currently generating about 0.03 per unit of risk. If you would invest  1,700  in Jacquet Metal Service on December 21, 2024 and sell it today you would earn a total of  370.00  from holding Jacquet Metal Service or generate 21.76% return on investment over 90 days.

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

Jacquet Metal Service  vs.  NRG ENERGY

Jacquet Metal Service

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jacquet Metal reported solid returns over the last few months and may actually be approaching a breakup point.

NRG ENERGY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NRG ENERGY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NRG ENERGY may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jacquet Metal and NRG ENERGY

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

The idea behind Jacquet Metal Service and NRG ENERGY 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.