Correlation Between Trx Real and JPP CAPITAL

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

By analyzing existing cross correlation between Trx Real Estate and JPP CAPITAL FDO, you can compare the effects of market volatilities on Trx Real and JPP CAPITAL 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 Trx Real with a short position of JPP CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trx Real and JPP CAPITAL.

Diversification Opportunities for Trx Real and JPP CAPITAL

0.42

Correlation Coefficient

Trx Real  JPP CAPITAL

Very weak diversification

The 3 months correlation between Trx and JPP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Trx Real Estate and JPP CAPITAL FDO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPP CAPITAL FDO and Trx Real 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 Trx Real Estate are associated (or correlated) with JPP CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPP CAPITAL FDO has no effect on the direction of Trx Real i.e., Trx Real and JPP CAPITAL go up and down completely randomly.

Pair Corralation between Trx Real and JPP CAPITAL

Assuming the 90 days trading horizon Trx Real Estate is expected to under-perform the JPP CAPITAL. But the fund apears to be less risky and, when comparing its historical volatility, Trx Real Estate is 1.67 times less risky than JPP CAPITAL. The fund trades about -0.02 of its potential returns per unit of risk. The JPP CAPITAL FDO is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  19,193  in JPP CAPITAL FDO on December 20, 2024 and sell it today you would lose (1,193) from holding JPP CAPITAL FDO or give up 6.22% of portfolio value over 90 days.

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

Trx Real Estate  vs.  JPP CAPITAL FDO

Trx Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trx Real Estate has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Trx Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPP CAPITAL FDO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPP CAPITAL FDO are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, JPP CAPITAL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trx Real and JPP CAPITAL

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

The idea behind Trx Real Estate and JPP CAPITAL FDO 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.