Correlation Between Jacob Micro and Main Thematic

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

By analyzing existing cross correlation between Jacob Micro Cap and Main Thematic Innovation, you can compare the effects of market volatilities on Jacob Micro and Main Thematic 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 Jacob Micro with a short position of Main Thematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacob Micro and Main Thematic.

Diversification Opportunities for Jacob Micro and Main Thematic

0.96

Correlation Coefficient

Jacob Micro  Main Thematic

Almost no diversification

The 3 months correlation between Jacob and Main is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Micro Cap and Main Thematic Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Thematic Innovation and Jacob Micro 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 Jacob Micro Cap are associated (or correlated) with Main Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Thematic Innovation has no effect on the direction of Jacob Micro i.e., Jacob Micro and Main Thematic go up and down completely randomly.

Pair Corralation between Jacob Micro and Main Thematic

Assuming the 90 days horizon Jacob Micro is expected to generate 1.04 times less return on investment than Main Thematic. But when comparing it to its historical volatility, Jacob Micro Cap is 1.19 times less risky than Main Thematic. It trades about 0.31 of its potential returns per unit of risk. Main Thematic Innovation is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,995  in Main Thematic Innovation on September 17, 2024 and sell it today you would earn a total of  161.00  from holding Main Thematic Innovation or generate 8.07% return on investment over 90 days.

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

Jacob Micro Cap  vs.  Main Thematic Innovation

Jacob Micro Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Micro Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jacob Micro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Main Thematic Innovation

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Thematic Innovation are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Main Thematic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacob Micro and Main Thematic

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

The idea behind Jacob Micro Cap and Main Thematic Innovation 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.