Correlation Between Hill Street and Jones Soda

Can any of the company-specific risk be diversified away by investing in both Hill Street and Jones Soda 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 Hill Street and Jones Soda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hill Street Beverage and Jones Soda Co, you can compare the effects of market volatilities on Hill Street and Jones Soda 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 Hill Street with a short position of Jones Soda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hill Street and Jones Soda.

Diversification Opportunities for Hill Street and Jones Soda

0.03

Correlation Coefficient

Hill Street  Jones Soda

Significant diversification

The 3 months correlation between Hill and Jones is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hill Street Beverage and Jones Soda Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jones Soda and Hill Street 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 Hill Street Beverage are associated (or correlated) with Jones Soda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jones Soda has no effect on the direction of Hill Street i.e., Hill Street and Jones Soda go up and down completely randomly.

Pair Corralation between Hill Street and Jones Soda

If you would invest  20.00  in Hill Street Beverage on September 22, 2024 and sell it today you would earn a total of  15.00  from holding Hill Street Beverage or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Hill Street Beverage  vs.  Jones Soda Co

Hill Street Beverage

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hill Street Beverage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Hill Street reported solid returns over the last few months and may actually be approaching a breakup point.

Jones Soda

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hill Street and Jones Soda

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

The idea behind Hill Street Beverage and Jones Soda Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..