Correlation Between St Joe and MSAD Insurance

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

By analyzing existing cross correlation between St Joe Company and MSAD Insurance Group, you can compare the effects of market volatilities on St Joe and MSAD Insurance 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 St Joe with a short position of MSAD Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Joe and MSAD Insurance.

Diversification Opportunities for St Joe and MSAD Insurance

0.34

Correlation Coefficient

St Joe  MSAD Insurance

Weak diversification

The 3 months correlation between JOE and MSAD is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding St Joe Company and MSAD Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD Insurance Group and St Joe 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 St Joe Company are associated (or correlated) with MSAD Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD Insurance Group has no effect on the direction of St Joe i.e., St Joe and MSAD Insurance go up and down completely randomly.

Pair Corralation between St Joe and MSAD Insurance

Considering the 90-day investment horizon St Joe Company is expected to under-perform the MSAD Insurance. But the stock apears to be less risky and, when comparing its historical volatility, St Joe Company is 1.43 times less risky than MSAD Insurance. The stock trades about -0.24 of its potential returns per unit of risk. The MSAD Insurance Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,245  in MSAD Insurance Group on September 13, 2024 and sell it today you would earn a total of  32.00  from holding MSAD Insurance Group or generate 1.43% return on investment over 90 days.

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

St Joe Company  vs.  MSAD Insurance Group

St Joe Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days St Joe Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MSAD Insurance Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MSAD Insurance Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, MSAD Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with St Joe and MSAD Insurance

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

The idea behind St Joe Company and MSAD Insurance Group 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.