Correlation Between Jupiter and EKO

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

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

Diversification Opportunities for Jupiter and EKO

-0.32

Correlation Coefficient

Jupiter  EKO

Very good diversification

The 3 months correlation between Jupiter and EKO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Jupiter and EKO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EKO and Jupiter 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 Jupiter are associated (or correlated) with EKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EKO has no effect on the direction of Jupiter i.e., Jupiter and EKO go up and down completely randomly.

Pair Corralation between Jupiter and EKO

Assuming the 90 days trading horizon Jupiter is expected to generate 44.33 times less return on investment than EKO. But when comparing it to its historical volatility, Jupiter is 31.39 times less risky than EKO. It trades about 0.17 of its potential returns per unit of risk. EKO is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  0.01  in EKO on September 1, 2024 and sell it today you would lose  0.00  from holding EKO or give up 82.46% of portfolio value over 90 days.

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

Jupiter  vs.  EKO

Jupiter

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Jupiter exhibited solid returns over the last few months and may actually be approaching a breakup point.

EKO

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EKO are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, EKO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jupiter and EKO

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

The idea behind Jupiter and EKO 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.