Correlation Between Global E and Jeffs Brands

Can any of the company-specific risk be diversified away by investing in both Global E and Jeffs Brands 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 Global E and Jeffs Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global E Online and Jeffs Brands, you can compare the effects of market volatilities on Global E and Jeffs Brands 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 Global E with a short position of Jeffs Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Jeffs Brands.

Diversification Opportunities for Global E and Jeffs Brands

0.8

Correlation Coefficient

Global E  Jeffs Brands

Very poor diversification

The 3 months correlation between Global and Jeffs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Jeffs Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeffs Brands and Global E 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 Global E Online are associated (or correlated) with Jeffs Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeffs Brands has no effect on the direction of Global E i.e., Global E and Jeffs Brands go up and down completely randomly.

Pair Corralation between Global E and Jeffs Brands

Given the investment horizon of 90 days Global E is expected to generate 23.63 times less return on investment than Jeffs Brands. But when comparing it to its historical volatility, Global E Online is 49.0 times less risky than Jeffs Brands. It trades about 0.27 of its potential returns per unit of risk. Jeffs Brands is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Jeffs Brands on August 30, 2024 and sell it today you would earn a total of  228.00  from holding Jeffs Brands or generate 1085.71% return on investment over 90 days.

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

Global E Online  vs.  Jeffs Brands

Global E Online

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jeffs Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeffs Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Jeffs Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global E and Jeffs Brands

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

The idea behind Global E Online and Jeffs Brands 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.