Correlation Between Joby Aviation and Encore Wire
Can any of the company-specific risk be diversified away by investing in both Joby Aviation and Encore Wire 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 Joby Aviation and Encore Wire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Joby Aviation and Encore Wire, you can compare the effects of market volatilities on Joby Aviation and Encore Wire 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 Joby Aviation with a short position of Encore Wire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joby Aviation and Encore Wire.
Diversification Opportunities for Joby Aviation and Encore Wire
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Joby and Encore is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Joby Aviation and Encore Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Wire and Joby Aviation 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 Joby Aviation are associated (or correlated) with Encore Wire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Wire has no effect on the direction of Joby Aviation i.e., Joby Aviation and Encore Wire go up and down completely randomly.
Pair Corralation between Joby Aviation and Encore Wire
Given the investment horizon of 90 days Joby Aviation is expected to under-perform the Encore Wire. In addition to that, Joby Aviation is 7.21 times more volatile than Encore Wire. It trades about -0.06 of its total potential returns per unit of risk. Encore Wire is currently generating about -0.15 per unit of volatility. If you would invest 28,303 in Encore Wire on February 27, 2024 and sell it today you would lose (434.00) from holding Encore Wire or give up 1.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Joby Aviation vs. Encore Wire
Performance |
Timeline |
Joby Aviation |
Encore Wire |
Joby Aviation and Encore Wire Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Joby Aviation and Encore Wire
The main advantage of trading using opposite Joby Aviation and Encore Wire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joby Aviation position performs unexpectedly, Encore Wire 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 Encore Wire will offset losses from the drop in Encore Wire's long position.Joby Aviation vs. Archer Aviation | Joby Aviation vs. Lilium NV | Joby Aviation vs. Blade Air Mobility | Joby Aviation vs. Rocket Lab USA |
Encore Wire vs. Advanced Energy Industries | Encore Wire vs. Acuity Brands | Encore Wire vs. Enersys | Encore Wire vs. nVent Electric PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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