Correlation Between Jefferies Financial and Fertilizantes Heringer

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

Diversification Opportunities for Jefferies Financial and Fertilizantes Heringer

0.67

Correlation Coefficient

Jefferies Financial  Fertilizantes Heringer

Poor diversification

The 3 months correlation between Jefferies and Fertilizantes is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and Fertilizantes Heringer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizantes Heringer 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 Fertilizantes Heringer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizantes Heringer has no effect on the direction of Jefferies Financial i.e., Jefferies Financial and Fertilizantes Heringer go up and down completely randomly.

Pair Corralation between Jefferies Financial and Fertilizantes Heringer

Assuming the 90 days trading horizon Jefferies Financial is expected to generate 3.39 times less return on investment than Fertilizantes Heringer. But when comparing it to its historical volatility, Jefferies Financial Group is 4.68 times less risky than Fertilizantes Heringer. It trades about 0.14 of its potential returns per unit of risk. Fertilizantes Heringer SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  367.00  in Fertilizantes Heringer SA on October 24, 2024 and sell it today you would earn a total of  198.00  from holding Fertilizantes Heringer SA or generate 53.95% return on investment over 90 days.

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

Jefferies Financial Group  vs.  Fertilizantes Heringer SA

Jefferies Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jefferies Financial Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Jefferies Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Fertilizantes Heringer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizantes Heringer SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fertilizantes Heringer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jefferies Financial and Fertilizantes Heringer

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

The idea behind Jefferies Financial Group and Fertilizantes Heringer SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.