Correlation Between Juniper Networks and TomCo Energy

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

By analyzing existing cross correlation between Juniper Networks and TomCo Energy Plc, you can compare the effects of market volatilities on Juniper Networks and TomCo Energy 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 Juniper Networks with a short position of TomCo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juniper Networks and TomCo Energy.

Diversification Opportunities for Juniper Networks and TomCo Energy

-0.21

Correlation Coefficient

Juniper Networks TomCo Energy

Very good diversification

The 24 months correlation between Juniper and TomCo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and TomCo Energy Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomCo Energy Plc and Juniper Networks 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 Juniper Networks are associated (or correlated) with TomCo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomCo Energy Plc has no effect on the direction of Juniper Networks i.e., Juniper Networks and TomCo Energy go up and down completely randomly.

Pair Corralation between Juniper Networks and TomCo Energy

Given the investment horizon of 90 days Juniper Networks is expected to generate 49.14 times less return on investment than TomCo Energy. But when comparing it to its historical volatility, Juniper Networks is 50.05 times less risky than TomCo Energy. It trades about 0.22 of its potential returns per unit of risk. TomCo Energy Plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.16  in TomCo Energy Plc on December 27, 2022 and sell it today you would earn a total of  0.52  from holding TomCo Energy Plc or generate 325.0% return on investment over 90 days.

Time Period	24 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Juniper Networks  vs.  TomCo Energy Plc

Juniper Networks

Juniper Performance

3 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Juniper Networks are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Juniper Networks is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

TomCo Energy Plc

TomCo Performance

7 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in TomCo Energy Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, TomCo Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Juniper Networks and TomCo Energy

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

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The idea behind Juniper Networks and TomCo Energy Plc 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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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 Bond Directory module to find actively traded corporate debentures issued by US companies.