Correlation Between Transurban and Jacquet Metal

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

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

Diversification Opportunities for Transurban and Jacquet Metal

-0.44

Correlation Coefficient

Transurban  Jacquet Metal

Very good diversification

The 3 months correlation between Transurban and Jacquet is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Transurban Group and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and Transurban 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 Transurban Group are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Transurban i.e., Transurban and Jacquet Metal go up and down completely randomly.

Pair Corralation between Transurban and Jacquet Metal

Assuming the 90 days horizon Transurban Group is expected to under-perform the Jacquet Metal. But the stock apears to be less risky and, when comparing its historical volatility, Transurban Group is 1.34 times less risky than Jacquet Metal. The stock trades about -0.09 of its potential returns per unit of risk. The Jacquet Metal Service is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,420  in Jacquet Metal Service on September 14, 2024 and sell it today you would earn a total of  224.00  from holding Jacquet Metal Service or generate 15.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Transurban Group  vs.  Jacquet Metal Service

Transurban Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Jacquet Metal Service

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jacquet Metal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transurban and Jacquet Metal

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

The idea behind Transurban Group and Jacquet Metal Service 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.