Correlation Between Iridium Communications and Joint Corp

Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Joint Corp 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 Iridium Communications and Joint Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iridium Communications and The Joint Corp, you can compare the effects of market volatilities on Iridium Communications and Joint Corp 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 Iridium Communications with a short position of Joint Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Joint Corp.

Diversification Opportunities for Iridium Communications and Joint Corp

0.39

Correlation Coefficient

Iridium Communications  Joint Corp

Weak diversification

The 3 months correlation between Iridium and Joint is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and The Joint Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Corp and Iridium Communications 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 Iridium Communications are associated (or correlated) with Joint Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Corp has no effect on the direction of Iridium Communications i.e., Iridium Communications and Joint Corp go up and down completely randomly.

Pair Corralation between Iridium Communications and Joint Corp

Given the investment horizon of 90 days Iridium Communications is expected to generate 1.37 times more return on investment than Joint Corp. However, Iridium Communications is 1.37 times more volatile than The Joint Corp. It trades about 0.0 of its potential returns per unit of risk. The Joint Corp is currently generating about -0.05 per unit of risk. If you would invest  3,050  in Iridium Communications on December 4, 2024 and sell it today you would lose (46.00) from holding Iridium Communications or give up 1.51% of portfolio value over 90 days.

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

Iridium Communications  vs.  The Joint Corp

Iridium Communications

Risk-Adjusted Performance

Weak

Over the last 90 days Iridium Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Iridium Communications is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Joint Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Joint Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Iridium Communications and Joint Corp

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

The idea behind Iridium Communications and The Joint Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.