Correlation Between JNC Resources and West Red

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

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

Diversification Opportunities for JNC Resources and West Red

-0.36

Correlation Coefficient

JNC Resources  West Red

Very good diversification

The 3 months correlation between JNC and West is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding JNC Resources and West Red Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Red Lake and JNC Resources 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 JNC Resources are associated (or correlated) with West Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Red Lake has no effect on the direction of JNC Resources i.e., JNC Resources and West Red go up and down completely randomly.

Pair Corralation between JNC Resources and West Red

Assuming the 90 days horizon JNC Resources is expected to generate 5.96 times more return on investment than West Red. However, JNC Resources is 5.96 times more volatile than West Red Lake. It trades about 0.23 of its potential returns per unit of risk. West Red Lake is currently generating about -0.06 per unit of risk. If you would invest  1.00  in JNC Resources on October 26, 2024 and sell it today you would earn a total of  0.80  from holding JNC Resources or generate 80.0% return on investment over 90 days.

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

JNC Resources  vs.  West Red Lake

JNC Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JNC Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, JNC Resources reported solid returns over the last few months and may actually be approaching a breakup point.

West Red Lake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days West Red Lake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, West Red is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with JNC Resources and West Red

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

The idea behind JNC Resources and West Red Lake 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..