Correlation Between Jack Henry and Innodata
Can any of the company-specific risk be diversified away by investing in both Jack Henry and Innodata 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 Jack Henry and Innodata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jack Henry Associates and Innodata, you can compare the effects of market volatilities on Jack Henry and Innodata 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 Jack Henry with a short position of Innodata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack Henry and Innodata.
Diversification Opportunities for Jack Henry and Innodata
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jack and Innodata is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jack Henry Associates and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Jack Henry 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 Jack Henry Associates are associated (or correlated) with Innodata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodata has no effect on the direction of Jack Henry i.e., Jack Henry and Innodata go up and down completely randomly.
Pair Corralation between Jack Henry and Innodata
Given the investment horizon of 90 days Jack Henry Associates is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, Jack Henry Associates is 8.35 times less risky than Innodata. The stock trades about -0.03 of its potential returns per unit of risk. The Innodata is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 848.00 in Innodata on February 22, 2024 and sell it today you would earn a total of 444.00 from holding Innodata or generate 52.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Jack Henry Associates vs. Innodata
Performance |
Timeline |
Jack Henry Associates |
Innodata |
Jack Henry and Innodata Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jack Henry and Innodata
The main advantage of trading using opposite Jack Henry and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack Henry position performs unexpectedly, Innodata 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 Innodata will offset losses from the drop in Innodata's long position.Jack Henry vs. CACI International | Jack Henry vs. CDW Corp | Jack Henry vs. Broadridge Financial Solutions | Jack Henry vs. ExlService Holdings |
Innodata vs. ASGN Inc | Innodata vs. Formula Systems 1985 | Innodata vs. FiscalNote Holdings | Innodata vs. International Business Machines |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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