Correlation Between Jito and Velo

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

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

Diversification Opportunities for Jito and Velo

0.37

Correlation Coefficient

Jito  Velo

Weak diversification

The 3 months correlation between Jito and Velo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Jito and Velo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velo and Jito 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 Jito are associated (or correlated) with Velo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velo has no effect on the direction of Jito i.e., Jito and Velo go up and down completely randomly.

Pair Corralation between Jito and Velo

Assuming the 90 days trading horizon Jito is expected to generate 1.05 times more return on investment than Velo. However, Jito is 1.05 times more volatile than Velo. It trades about 0.15 of its potential returns per unit of risk. Velo is currently generating about 0.07 per unit of risk. If you would invest  217.00  in Jito on September 3, 2024 and sell it today you would earn a total of  153.00  from holding Jito or generate 70.51% return on investment over 90 days.

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

Jito  vs.  Velo

Jito

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jito are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Jito exhibited solid returns over the last few months and may actually be approaching a breakup point.

Velo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Velo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Velo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jito and Velo

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

The idea behind Jito and Velo 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.