Correlation Between Piper Sandler and PJT Partners

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

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

Diversification Opportunities for Piper Sandler and PJT Partners

0.88

Correlation Coefficient

Piper Sandler  PJT Partners

Very poor diversification

The 3 months correlation between Piper and PJT is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Piper Sandler Companies and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners and Piper Sandler 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 Piper Sandler Companies are associated (or correlated) with PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Piper Sandler i.e., Piper Sandler and PJT Partners go up and down completely randomly.

Pair Corralation between Piper Sandler and PJT Partners

Given the investment horizon of 90 days Piper Sandler Companies is expected to under-perform the PJT Partners. But the stock apears to be less risky and, when comparing its historical volatility, Piper Sandler Companies is 1.02 times less risky than PJT Partners. The stock trades about -0.11 of its potential returns per unit of risk. The PJT Partners is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  15,686  in PJT Partners on December 28, 2024 and sell it today you would lose (1,694) from holding PJT Partners or give up 10.8% of portfolio value over 90 days.

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

Piper Sandler Companies  vs.  PJT Partners

Piper Sandler Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Piper Sandler Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

PJT Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days PJT Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Piper Sandler and PJT Partners

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

The idea behind Piper Sandler Companies and PJT Partners 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.