Correlation Between SPORT LISBOA and Jupiter Fund

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

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

Diversification Opportunities for SPORT LISBOA and Jupiter Fund

0.6

Correlation Coefficient

SPORT LISBOA  Jupiter Fund

Poor diversification

The 3 months correlation between SPORT and Jupiter is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Jupiter Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Fund Management and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Jupiter Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Fund Management has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Jupiter Fund go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Jupiter Fund

Assuming the 90 days horizon SPORT LISBOA E is expected to under-perform the Jupiter Fund. In addition to that, SPORT LISBOA is 1.25 times more volatile than Jupiter Fund Management. It trades about -0.02 of its total potential returns per unit of risk. Jupiter Fund Management is currently generating about -0.01 per unit of volatility. If you would invest  101.00  in Jupiter Fund Management on September 21, 2024 and sell it today you would lose (2.00) from holding Jupiter Fund Management or give up 1.98% of portfolio value over 90 days.

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

SPORT LISBOA E  vs.  Jupiter Fund Management

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jupiter Fund Management

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SPORT LISBOA and Jupiter Fund

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

The idea behind SPORT LISBOA E and Jupiter Fund Management 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.