Correlation Between Jefferies Financial and Riot Blockchain

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

Diversification Opportunities for Jefferies Financial and Riot Blockchain

0.85

Correlation Coefficient

Jefferies Financial  Riot Blockchain

Very poor diversification

The 3 months correlation between Jefferies and Riot is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and Riot Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riot Blockchain 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 Riot Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riot Blockchain has no effect on the direction of Jefferies Financial i.e., Jefferies Financial and Riot Blockchain go up and down completely randomly.

Pair Corralation between Jefferies Financial and Riot Blockchain

Considering the 90-day investment horizon Jefferies Financial Group is expected to under-perform the Riot Blockchain. But the stock apears to be less risky and, when comparing its historical volatility, Jefferies Financial Group is 1.97 times less risky than Riot Blockchain. The stock trades about -0.2 of its potential returns per unit of risk. The Riot Blockchain is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,050  in Riot Blockchain on December 28, 2024 and sell it today you would lose (260.00) from holding Riot Blockchain or give up 24.76% of portfolio value over 90 days.

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

Jefferies Financial Group  vs.  Riot Blockchain

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 nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Riot Blockchain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Riot Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Jefferies Financial and Riot Blockchain

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

The idea behind Jefferies Financial Group and Riot Blockchain 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.