Correlation Between Jacquet Metal and CAC Next

Can any of the company-specific risk be diversified away by investing in both Jacquet Metal and CAC Next 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 Jacquet Metal and CAC Next into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jacquet Metal Service and CAC Next 20, you can compare the effects of market volatilities on Jacquet Metal and CAC Next 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 Jacquet Metal with a short position of CAC Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and CAC Next.

Diversification Opportunities for Jacquet Metal and CAC Next

0.15

Correlation Coefficient

Jacquet Metal  CAC Next

Average diversification

The 3 months correlation between Jacquet and CAC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and CAC Next 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAC Next 20 and Jacquet Metal 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 Jacquet Metal Service are associated (or correlated) with CAC Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAC Next 20 has no effect on the direction of Jacquet Metal i.e., Jacquet Metal and CAC Next go up and down completely randomly.

Pair Corralation between Jacquet Metal and CAC Next

Assuming the 90 days trading horizon Jacquet Metal Service is expected to generate 1.91 times more return on investment than CAC Next. However, Jacquet Metal is 1.91 times more volatile than CAC Next 20. It trades about 0.25 of its potential returns per unit of risk. CAC Next 20 is currently generating about -0.07 per unit of risk. If you would invest  1,590  in Jacquet Metal Service on September 26, 2024 and sell it today you would earn a total of  120.00  from holding Jacquet Metal Service or generate 7.55% return on investment over 90 days.

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

Jacquet Metal Service  vs.  CAC Next 20

Pair Trading with Jacquet Metal and CAC Next

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

The idea behind Jacquet Metal Service and CAC Next 20 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.