Can any of the company-specific risk be diversified away by investing in both Jyske Invest and Sparinvest INDEX 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 Jyske Invest and Sparinvest INDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jyske Invest Nye and Sparinvest INDEX Mellem, you can compare the effects of market volatilities on Jyske Invest and Sparinvest INDEX 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 Jyske Invest with a short position of Sparinvest INDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jyske Invest and Sparinvest INDEX.
Diversification Opportunities for Jyske Invest and Sparinvest INDEX
The 3 months correlation between Jyske and Sparinvest is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jyske Invest Nye and Sparinvest INDEX Mellem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest INDEX Mellem and Jyske Invest 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 Jyske Invest Nye are associated (or correlated) with Sparinvest INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest INDEX Mellem has no effect on the direction of Jyske Invest i.e., Jyske Invest and Sparinvest INDEX go up and down completely randomly.
Pair Corralation between Jyske Invest and Sparinvest INDEX
Assuming the 90 days trading horizon Jyske Invest Nye is expected to under-perform the Sparinvest INDEX. In addition to that, Jyske Invest is 1.2 times more volatile than Sparinvest INDEX Mellem. It trades about 0.0 of its total potential returns per unit of risk. Sparinvest INDEX Mellem is currently generating about 0.04 per unit of volatility. If you would invest 11,160 in Sparinvest INDEX Mellem on March 6, 2024 and sell it today you would earn a total of 70.00 from holding Sparinvest INDEX Mellem or generate 0.63% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Jyske Invest Nye are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jyske Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Mellem are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent primary indicators, Sparinvest INDEX is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.