Correlation Between Crombie Real and Juniata Valley

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

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

Diversification Opportunities for Crombie Real and Juniata Valley

0.57

Correlation Coefficient

Crombie Real  Juniata Valley

Very weak diversification

The 3 months correlation between Crombie and Juniata is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Crombie Real Estate and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial and Crombie Real 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 Crombie Real Estate are associated (or correlated) with Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Crombie Real i.e., Crombie Real and Juniata Valley go up and down completely randomly.

Pair Corralation between Crombie Real and Juniata Valley

Assuming the 90 days horizon Crombie Real Estate is expected to generate 0.61 times more return on investment than Juniata Valley. However, Crombie Real Estate is 1.65 times less risky than Juniata Valley. It trades about -0.2 of its potential returns per unit of risk. Juniata Valley Financial is currently generating about -0.24 per unit of risk. If you would invest  1,020  in Crombie Real Estate on February 4, 2024 and sell it today you would lose (90.00) from holding Crombie Real Estate or give up 8.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Crombie Real Estate  vs.  Juniata Valley Financial

Crombie Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Juniata Valley Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Crombie Real and Juniata Valley

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

The idea behind Crombie Real Estate and Juniata Valley Financial 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.