Correlation Between Motorola Solutions and JCDecaux

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

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

Diversification Opportunities for Motorola Solutions and JCDecaux

-0.85

Correlation Coefficient

Motorola Solutions  JCDecaux

Pay attention - limited upside

The 3 months correlation between Motorola and JCDecaux is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Motorola Solutions and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA and Motorola Solutions 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 Motorola Solutions are associated (or correlated) with JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of Motorola Solutions i.e., Motorola Solutions and JCDecaux go up and down completely randomly.

Pair Corralation between Motorola Solutions and JCDecaux

Assuming the 90 days trading horizon Motorola Solutions is expected to generate 0.74 times more return on investment than JCDecaux. However, Motorola Solutions is 1.36 times less risky than JCDecaux. It trades about 0.03 of its potential returns per unit of risk. JCDecaux SA is currently generating about -0.14 per unit of risk. If you would invest  43,286  in Motorola Solutions on October 13, 2024 and sell it today you would earn a total of  984.00  from holding Motorola Solutions or generate 2.27% return on investment over 90 days.

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

Motorola Solutions  vs.  JCDecaux SA

Motorola Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Motorola Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Motorola Solutions is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

JCDecaux SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCDecaux SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Motorola Solutions and JCDecaux

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

The idea behind Motorola Solutions and JCDecaux SA 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.