Correlation Between Mobile Tornado and Jacquet Metal

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

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

Diversification Opportunities for Mobile Tornado and Jacquet Metal

-0.38

Correlation Coefficient

Mobile Tornado  Jacquet Metal

Very good diversification

The 3 months correlation between Mobile and Jacquet is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Tornado Group and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and Mobile Tornado 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 Mobile Tornado Group are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Mobile Tornado i.e., Mobile Tornado and Jacquet Metal go up and down completely randomly.

Pair Corralation between Mobile Tornado and Jacquet Metal

Assuming the 90 days trading horizon Mobile Tornado Group is expected to generate 6.4 times more return on investment than Jacquet Metal. However, Mobile Tornado is 6.4 times more volatile than Jacquet Metal Service. It trades about 0.02 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.01 per unit of risk. If you would invest  195.00  in Mobile Tornado Group on September 29, 2024 and sell it today you would lose (55.00) from holding Mobile Tornado Group or give up 28.21% of portfolio value over 90 days.

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

Mobile Tornado Group  vs.  Jacquet Metal Service

Mobile Tornado Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Tornado Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mobile Tornado exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jacquet Metal Service

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Jacquet Metal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mobile Tornado and Jacquet Metal

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

The idea behind Mobile Tornado Group and Jacquet Metal Service 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.