Correlation Between Oil Equipment and Joann
Can any of the company-specific risk be diversified away by investing in both Oil Equipment and Joann 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 Oil Equipment and Joann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Equipment Services and Joann Inc, you can compare the effects of market volatilities on Oil Equipment and Joann 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 Oil Equipment with a short position of Joann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Equipment and Joann.
Diversification Opportunities for Oil Equipment and Joann
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Oil and Joann is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Oil Equipment Services and Joann Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joann Inc and Oil Equipment 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 Oil Equipment Services are associated (or correlated) with Joann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joann Inc has no effect on the direction of Oil Equipment i.e., Oil Equipment and Joann go up and down completely randomly.
Pair Corralation between Oil Equipment and Joann
Assuming the 90 days horizon Oil Equipment Services is expected to generate 0.24 times more return on investment than Joann. However, Oil Equipment Services is 4.22 times less risky than Joann. It trades about -0.08 of its potential returns per unit of risk. Joann Inc is currently generating about -0.26 per unit of risk. If you would invest 9,966 in Oil Equipment Services on January 20, 2024 and sell it today you would lose (383.00) from holding Oil Equipment Services or give up 3.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Oil Equipment Services vs. Joann Inc
Performance |
Timeline |
Oil Equipment Services |
Joann Inc |
Oil Equipment and Joann Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oil Equipment and Joann
The main advantage of trading using opposite Oil Equipment and Joann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Equipment position performs unexpectedly, Joann 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 Joann will offset losses from the drop in Joann's long position.Oil Equipment vs. Short Real Estate | Oil Equipment vs. Short Real Estate | Oil Equipment vs. Ultrashort Mid Cap Profund | Oil Equipment vs. Ultrashort Mid Cap Profund |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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