Correlation Between Joint Corp and Leonardo Spa

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

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

Diversification Opportunities for Joint Corp and Leonardo Spa

0.41

Correlation Coefficient

Joint Corp  Leonardo Spa

Very weak diversification

The 3 months correlation between Joint and Leonardo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Joint Corp and Leonardo Spa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonardo Spa and Joint Corp 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 The Joint Corp are associated (or correlated) with Leonardo Spa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonardo Spa has no effect on the direction of Joint Corp i.e., Joint Corp and Leonardo Spa go up and down completely randomly.

Pair Corralation between Joint Corp and Leonardo Spa

Given the investment horizon of 90 days Joint Corp is expected to generate 2.54 times less return on investment than Leonardo Spa. But when comparing it to its historical volatility, The Joint Corp is 1.32 times less risky than Leonardo Spa. It trades about 0.04 of its potential returns per unit of risk. Leonardo Spa is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,369  in Leonardo Spa on September 4, 2024 and sell it today you would earn a total of  413.00  from holding Leonardo Spa or generate 17.43% return on investment over 90 days.

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

The Joint Corp  vs.  Leonardo Spa

Joint Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Joint Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Joint Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Leonardo Spa

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leonardo Spa are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Leonardo Spa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joint Corp and Leonardo Spa

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

The idea behind The Joint Corp and Leonardo Spa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.