Correlation Between Jernimo Martins and Waste Management
Can any of the company-specific risk be diversified away by investing in both Jernimo Martins and Waste Management 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 Jernimo Martins and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jernimo Martins SGPS and Waste Management, you can compare the effects of market volatilities on Jernimo Martins and Waste Management 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 Jernimo Martins with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jernimo Martins and Waste Management.
Diversification Opportunities for Jernimo Martins and Waste Management
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jernimo and Waste is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jernimo Martins SGPS and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and Jernimo Martins 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 Jernimo Martins SGPS are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Jernimo Martins i.e., Jernimo Martins and Waste Management go up and down completely randomly.
Pair Corralation between Jernimo Martins and Waste Management
Assuming the 90 days horizon Jernimo Martins SGPS is expected to generate 1.51 times more return on investment than Waste Management. However, Jernimo Martins is 1.51 times more volatile than Waste Management. It trades about 0.11 of its potential returns per unit of risk. Waste Management is currently generating about 0.02 per unit of risk. If you would invest 1,652 in Jernimo Martins SGPS on September 23, 2024 and sell it today you would earn a total of 153.00 from holding Jernimo Martins SGPS or generate 9.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Jernimo Martins SGPS vs. Waste Management
Performance |
Timeline |
Jernimo Martins SGPS |
Waste Management |
Jernimo Martins and Waste Management Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jernimo Martins and Waste Management
The main advantage of trading using opposite Jernimo Martins and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jernimo Martins position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.Jernimo Martins vs. Shin Etsu Chemical Co | Jernimo Martins vs. PTT Global Chemical | Jernimo Martins vs. Waste Management | Jernimo Martins vs. China BlueChemical |
Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Apple Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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