Correlation Between Jeffs Brands and Twilio

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

By analyzing existing cross correlation between Jeffs Brands and Twilio Inc, you can compare the effects of market volatilities on Jeffs Brands and Twilio 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 Jeffs Brands with a short position of Twilio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeffs Brands and Twilio.

Diversification Opportunities for Jeffs Brands and Twilio

0.84

Correlation Coefficient

Jeffs Brands  Twilio

Very poor diversification

The 3 months correlation between Jeffs and Twilio is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Jeffs Brands and Twilio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twilio Inc and Jeffs Brands 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 Jeffs Brands are associated (or correlated) with Twilio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twilio Inc has no effect on the direction of Jeffs Brands i.e., Jeffs Brands and Twilio go up and down completely randomly.

Pair Corralation between Jeffs Brands and Twilio

Given the investment horizon of 90 days Jeffs Brands is expected to generate 35.22 times more return on investment than Twilio. However, Jeffs Brands is 35.22 times more volatile than Twilio Inc. It trades about 0.1 of its potential returns per unit of risk. Twilio Inc is currently generating about 0.22 per unit of risk. If you would invest  29.00  in Jeffs Brands on September 21, 2024 and sell it today you would earn a total of  210.00  from holding Jeffs Brands or generate 724.14% return on investment over 90 days.

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

Jeffs Brands  vs.  Twilio Inc

Jeffs Brands

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeffs Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental drivers, Jeffs Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Twilio Inc

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Twilio Inc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Twilio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeffs Brands and Twilio

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

The idea behind Jeffs Brands and Twilio Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.