Correlation Between New World and St Joe

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

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

Diversification Opportunities for New World and St Joe

0.42

Correlation Coefficient

New World  St Joe

Very weak diversification

The 3 months correlation between New and JOE is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding New World Development and St Joe Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Joe Company and New World 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 New World Development are associated (or correlated) with St Joe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Joe Company has no effect on the direction of New World i.e., New World and St Joe go up and down completely randomly.

Pair Corralation between New World and St Joe

Assuming the 90 days horizon New World Development is expected to under-perform the St Joe. In addition to that, New World is 1.4 times more volatile than St Joe Company. It trades about -0.06 of its total potential returns per unit of risk. St Joe Company is currently generating about -0.02 per unit of volatility. If you would invest  5,259  in St Joe Company on September 14, 2024 and sell it today you would lose (595.00) from holding St Joe Company or give up 11.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.63%
Values	Daily Returns

New World Development  vs.  St Joe Company

New World Development

Risk-Adjusted Performance

0 of 100

Very Weak

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

St Joe Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days St Joe Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with New World and St Joe

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

The idea behind New World Development and St Joe Company 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.