Correlation Between Axalta Coating and Joint Corp

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Joint Corp 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 Axalta Coating and Joint Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axalta Coating Systems and The Joint Corp, you can compare the effects of market volatilities on Axalta Coating and Joint Corp 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 Axalta Coating with a short position of Joint Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Joint Corp.

Diversification Opportunities for Axalta Coating and Joint Corp

0.67

Correlation Coefficient

Axalta Coating  Joint Corp

Poor diversification

The 3 months correlation between Axalta and Joint is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and The Joint Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Corp and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Joint Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Corp has no effect on the direction of Axalta Coating i.e., Axalta Coating and Joint Corp go up and down completely randomly.

Pair Corralation between Axalta Coating and Joint Corp

Given the investment horizon of 90 days Axalta Coating Systems is expected to under-perform the Joint Corp. But the stock apears to be less risky and, when comparing its historical volatility, Axalta Coating Systems is 1.3 times less risky than Joint Corp. The stock trades about -0.63 of its potential returns per unit of risk. The The Joint Corp is currently generating about -0.48 of returns per unit of risk over similar time horizon. If you would invest  1,164  in The Joint Corp on September 29, 2024 and sell it today you would lose (174.00) from holding The Joint Corp or give up 14.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Axalta Coating Systems  vs.  The Joint Corp

Axalta Coating Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axalta Coating Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Axalta Coating is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Joint Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Joint Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Axalta Coating and Joint Corp

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

The idea behind Axalta Coating Systems and The Joint Corp 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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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.