Correlation Between J Long and Advance Auto
Can any of the company-specific risk be diversified away by investing in both J Long and Advance Auto 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 J Long and Advance Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Long Group Limited and Advance Auto Parts, you can compare the effects of market volatilities on J Long and Advance Auto 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 J Long with a short position of Advance Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Long and Advance Auto.
Diversification Opportunities for J Long and Advance Auto
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between J Long and Advance is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding J Long Group Limited and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and J Long 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 J Long Group Limited are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of J Long i.e., J Long and Advance Auto go up and down completely randomly.
Pair Corralation between J Long and Advance Auto
Allowing for the 90-day total investment horizon J Long Group Limited is expected to under-perform the Advance Auto. In addition to that, J Long is 3.75 times more volatile than Advance Auto Parts. It trades about -0.05 of its total potential returns per unit of risk. Advance Auto Parts is currently generating about -0.02 per unit of volatility. If you would invest 6,842 in Advance Auto Parts on September 12, 2024 and sell it today you would lose (2,136) from holding Advance Auto Parts or give up 31.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 63.35% |
Values | Daily Returns |
J Long Group Limited vs. Advance Auto Parts
Performance |
Timeline |
J Long Group |
Advance Auto Parts |
J Long and Advance Auto Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with J Long and Advance Auto
The main advantage of trading using opposite J Long and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Long position performs unexpectedly, Advance Auto 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 Advance Auto will offset losses from the drop in Advance Auto's long position.J Long vs. Ermenegildo Zegna NV | J Long vs. Columbia Sportswear | J Long vs. Gildan Activewear | J Long vs. G III Apparel Group |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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