Correlation Between Independence Realty and Juniata Valley

Can any of the company-specific risk be diversified away by investing in both Independence Realty and Juniata Valley 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 Independence Realty and Juniata Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Independence Realty Trust and Juniata Valley Financial, you can compare the effects of market volatilities on Independence Realty and Juniata Valley 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 Independence Realty with a short position of Juniata Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Realty and Juniata Valley.

Diversification Opportunities for Independence Realty and Juniata Valley

0.68

Correlation Coefficient

Independence Realty  Juniata Valley

Poor diversification

The 3 months correlation between Independence and Juniata is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial and Independence Realty 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 Independence Realty Trust are associated (or correlated) with Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Independence Realty i.e., Independence Realty and Juniata Valley go up and down completely randomly.

Pair Corralation between Independence Realty and Juniata Valley

Considering the 90-day investment horizon Independence Realty Trust is expected to under-perform the Juniata Valley. But the stock apears to be less risky and, when comparing its historical volatility, Independence Realty Trust is 1.8 times less risky than Juniata Valley. The stock trades about -0.23 of its potential returns per unit of risk. The Juniata Valley Financial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,300  in Juniata Valley Financial on September 27, 2024 and sell it today you would earn a total of  25.00  from holding Juniata Valley Financial or generate 1.92% return on investment over 90 days.

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

Independence Realty Trust  vs.  Juniata Valley Financial

Independence Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Independence Realty is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Juniata Valley Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Independence Realty and Juniata Valley

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

The idea behind Independence Realty Trust and Juniata Valley Financial 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.