Correlation Between Jefferies Financial and ON Semiconductor

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

Diversification Opportunities for Jefferies Financial and ON Semiconductor

0.03

Correlation Coefficient

Jefferies Financial  ON Semiconductor

Significant diversification

The 3 months correlation between Jefferies and O2NS34 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Jefferies Financial i.e., Jefferies Financial and ON Semiconductor go up and down completely randomly.

Pair Corralation between Jefferies Financial and ON Semiconductor

Assuming the 90 days trading horizon Jefferies Financial Group is expected to generate 0.88 times more return on investment than ON Semiconductor. However, Jefferies Financial Group is 1.14 times less risky than ON Semiconductor. It trades about -0.11 of its potential returns per unit of risk. ON Semiconductor is currently generating about -0.33 per unit of risk. If you would invest  49,100  in Jefferies Financial Group on October 26, 2024 and sell it today you would lose (3,040) from holding Jefferies Financial Group or give up 6.19% of portfolio value over 90 days.

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

Jefferies Financial Group  vs.  ON Semiconductor

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 weak technical and fundamental indicators, Jefferies Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jefferies Financial and ON Semiconductor

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

The idea behind Jefferies Financial Group and ON Semiconductor 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.