Correlation Between Transcontinental and Jones Lang

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

By analyzing existing cross correlation between Transcontinental Realty Investors and Jones Lang LaSalle, you can compare the effects of market volatilities on Transcontinental and Jones Lang 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 Transcontinental with a short position of Jones Lang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Jones Lang.

Diversification Opportunities for Transcontinental and Jones Lang

0.31

Correlation Coefficient

Transcontinental  Jones Lang

Weak diversification

The 3 months correlation between Transcontinental and Jones is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental Realty Invest and Jones Lang LaSalle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jones Lang LaSalle and Transcontinental 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 Transcontinental Realty Investors are associated (or correlated) with Jones Lang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jones Lang LaSalle has no effect on the direction of Transcontinental i.e., Transcontinental and Jones Lang go up and down completely randomly.

Pair Corralation between Transcontinental and Jones Lang

Considering the 90-day investment horizon Transcontinental is expected to generate 14.86 times less return on investment than Jones Lang. But when comparing it to its historical volatility, Transcontinental Realty Investors is 1.21 times less risky than Jones Lang. It trades about 0.01 of its potential returns per unit of risk. Jones Lang LaSalle is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  25,138  in Jones Lang LaSalle on September 12, 2024 and sell it today you would earn a total of  1,726  from holding Jones Lang LaSalle or generate 6.87% return on investment over 90 days.

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

Transcontinental Realty Invest  vs.  Jones Lang LaSalle

Transcontinental Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transcontinental Realty Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Transcontinental is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Jones Lang LaSalle

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jones Lang LaSalle are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Jones Lang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Transcontinental and Jones Lang

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

The idea behind Transcontinental Realty Investors and Jones Lang LaSalle 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.