Correlation Between Thomson Reuters and Ijj

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

By analyzing existing cross correlation between Thomson Reuters Corp and Ijj Corporation, you can compare the effects of market volatilities on Thomson Reuters and Ijj 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 Thomson Reuters with a short position of Ijj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thomson Reuters and Ijj.

Diversification Opportunities for Thomson Reuters and Ijj

-0.18

Correlation Coefficient

Thomson Reuters  Ijj

Good diversification

The 3 months correlation between Thomson and Ijj is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Thomson Reuters Corp and Ijj Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ijj Corporation and Thomson Reuters 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 Thomson Reuters Corp are associated (or correlated) with Ijj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ijj Corporation has no effect on the direction of Thomson Reuters i.e., Thomson Reuters and Ijj go up and down completely randomly.

Pair Corralation between Thomson Reuters and Ijj

Considering the 90-day investment horizon Thomson Reuters Corp is expected to under-perform the Ijj. But the stock apears to be less risky and, when comparing its historical volatility, Thomson Reuters Corp is 9.83 times less risky than Ijj. The stock trades about -0.08 of its potential returns per unit of risk. The Ijj Corporation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Ijj Corporation on August 31, 2024 and sell it today you would earn a total of  0.01  from holding Ijj Corporation or generate 25.0% return on investment over 90 days.

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

Thomson Reuters Corp  vs.  Ijj Corp.

Thomson Reuters Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ijj Corporation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ijj Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward-looking indicators, Ijj reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thomson Reuters and Ijj

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

The idea behind Thomson Reuters Corp and Ijj Corporation 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.