Correlation Between Jefferies Financial and Charter Communications

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

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

Diversification Opportunities for Jefferies Financial and Charter Communications

0.19

Correlation Coefficient

Jefferies Financial  Charter Communications

Average diversification

The 3 months correlation between Jefferies and Charter is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Jefferies Financial 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 Jefferies Financial Group are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Jefferies Financial i.e., Jefferies Financial and Charter Communications go up and down completely randomly.

Pair Corralation between Jefferies Financial and Charter Communications

Assuming the 90 days trading horizon Jefferies Financial Group is expected to under-perform the Charter Communications. In addition to that, Jefferies Financial is 1.21 times more volatile than Charter Communications. It trades about -0.21 of its total potential returns per unit of risk. Charter Communications is currently generating about -0.01 per unit of volatility. If you would invest  3,608  in Charter Communications on December 26, 2024 and sell it today you would lose (85.00) from holding Charter Communications or give up 2.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Jefferies Financial Group  vs.  Charter Communications

Jefferies Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jefferies Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Charter Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jefferies Financial and Charter Communications

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

The idea behind Jefferies Financial Group and Charter Communications 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.