Correlation Between Jiayin and Targa Resources

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

By analyzing existing cross correlation between Jiayin Group and Targa Resources Corp, you can compare the effects of market volatilities on Jiayin and Targa Resources 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 Jiayin with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiayin and Targa Resources.

Diversification Opportunities for Jiayin and Targa Resources

-0.48

Correlation Coefficient

Jiayin  Targa Resources

Very good diversification

The 3 months correlation between Jiayin and Targa is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp and Jiayin 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 Jiayin Group are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of Jiayin i.e., Jiayin and Targa Resources go up and down completely randomly.

Pair Corralation between Jiayin and Targa Resources

Given the investment horizon of 90 days Jiayin Group is expected to generate 2.66 times more return on investment than Targa Resources. However, Jiayin is 2.66 times more volatile than Targa Resources Corp. It trades about 0.06 of its potential returns per unit of risk. Targa Resources Corp is currently generating about 0.13 per unit of risk. If you would invest  273.00  in Jiayin Group on October 4, 2024 and sell it today you would earn a total of  383.00  from holding Jiayin Group or generate 140.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

Jiayin Group  vs.  Targa Resources Corp

Jiayin Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiayin Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Targa Resources Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Targa Resources Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Targa Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiayin and Targa Resources

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

The idea behind Jiayin Group and Targa Resources Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.