Correlation Between Pressure Technologies and Raymond James

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

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

Diversification Opportunities for Pressure Technologies and Raymond James

0.69

Correlation Coefficient

Pressure Technologies  Raymond James

Poor diversification

The 3 months correlation between Pressure and Raymond is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pressure Technologies Plc and Raymond James Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raymond James Financial and Pressure Technologies 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 Pressure Technologies Plc are associated (or correlated) with Raymond James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raymond James Financial has no effect on the direction of Pressure Technologies i.e., Pressure Technologies and Raymond James go up and down completely randomly.

Pair Corralation between Pressure Technologies and Raymond James

Assuming the 90 days trading horizon Pressure Technologies is expected to generate 3.52 times less return on investment than Raymond James. In addition to that, Pressure Technologies is 1.41 times more volatile than Raymond James Financial. It trades about 0.01 of its total potential returns per unit of risk. Raymond James Financial is currently generating about 0.05 per unit of volatility. If you would invest  11,086  in Raymond James Financial on October 11, 2024 and sell it today you would earn a total of  4,801  from holding Raymond James Financial or generate 43.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.13%
Values	Daily Returns

Pressure Technologies Plc  vs.  Raymond James Financial

Pressure Technologies Plc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pressure Technologies Plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Pressure Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Raymond James Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Raymond James Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Raymond James unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pressure Technologies and Raymond James

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

The idea behind Pressure Technologies Plc and Raymond James Financial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.