Correlation Between Crombie Real and Joby Aviation

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

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

Diversification Opportunities for Crombie Real and Joby Aviation

0.5

Correlation Coefficient

Crombie Real  Joby Aviation

Very weak diversification

The 3 months correlation between Crombie and Joby is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation and Crombie 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 Crombie Real Estate are associated (or correlated) with Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Crombie Real i.e., Crombie Real and Joby Aviation go up and down completely randomly.

Pair Corralation between Crombie Real and Joby Aviation

Assuming the 90 days horizon Crombie Real Estate is expected to generate 0.39 times more return on investment than Joby Aviation. However, Crombie Real Estate is 2.55 times less risky than Joby Aviation. It trades about -0.11 of its potential returns per unit of risk. Joby Aviation is currently generating about -0.09 per unit of risk. If you would invest  1,033  in Crombie Real Estate on February 20, 2024 and sell it today you would lose (90.00) from holding Crombie Real Estate or give up 8.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Crombie Real Estate  vs.  Joby Aviation

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Joby Aviation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Crombie Real and Joby Aviation

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

The idea behind Crombie Real Estate and Joby Aviation 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..