Correlation Between Jackpot Digital and Floor Decor

Can any of the company-specific risk be diversified away by investing in both Jackpot Digital and Floor Decor 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 Jackpot Digital and Floor Decor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jackpot Digital and Floor Decor Holdings, you can compare the effects of market volatilities on Jackpot Digital and Floor Decor 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 Jackpot Digital with a short position of Floor Decor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jackpot Digital and Floor Decor.

Diversification Opportunities for Jackpot Digital and Floor Decor

0.33

Correlation Coefficient

Jackpot Digital  Floor Decor

Weak diversification

The 3 months correlation between Jackpot and Floor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jackpot Digital and Floor Decor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floor Decor Holdings and Jackpot Digital 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 Jackpot Digital are associated (or correlated) with Floor Decor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floor Decor Holdings has no effect on the direction of Jackpot Digital i.e., Jackpot Digital and Floor Decor go up and down completely randomly.

Pair Corralation between Jackpot Digital and Floor Decor

Assuming the 90 days horizon Jackpot Digital is expected to generate 2.62 times more return on investment than Floor Decor. However, Jackpot Digital is 2.62 times more volatile than Floor Decor Holdings. It trades about 0.02 of its potential returns per unit of risk. Floor Decor Holdings is currently generating about 0.04 per unit of risk. If you would invest  6.06  in Jackpot Digital on September 6, 2024 and sell it today you would lose (1.36) from holding Jackpot Digital or give up 22.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Jackpot Digital  vs.  Floor Decor Holdings

Jackpot Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jackpot Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Jackpot Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Floor Decor Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Floor Decor Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Floor Decor is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Jackpot Digital and Floor Decor

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

The idea behind Jackpot Digital and Floor Decor Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.