Correlation Between Joby Aviation and RDW WT

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

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

Diversification Opportunities for Joby Aviation and RDW WT

-0.47

Correlation Coefficient

Joby Aviation  RDW WT

Very good diversification

The 3 months correlation between Joby and RDW is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Joby Aviation and RDW WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RDW WT and Joby Aviation 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 Joby Aviation are associated (or correlated) with RDW WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RDW WT has no effect on the direction of Joby Aviation i.e., Joby Aviation and RDW WT go up and down completely randomly.

Pair Corralation between Joby Aviation and RDW WT

Assuming the 90 days trading horizon Joby Aviation is expected to generate 1.79 times less return on investment than RDW WT. But when comparing it to its historical volatility, Joby Aviation is 1.11 times less risky than RDW WT. It trades about 0.2 of its potential returns per unit of risk. RDW WT is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  410.00  in RDW WT on October 10, 2024 and sell it today you would earn a total of  248.00  from holding RDW WT or generate 60.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Joby Aviation  vs.  RDW WT

Joby Aviation

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Joby Aviation are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Joby Aviation unveiled solid returns over the last few months and may actually be approaching a breakup point.

RDW WT

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RDW WT are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, RDW WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joby Aviation and RDW WT

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

The idea behind Joby Aviation and RDW WT 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..