Correlation Between PulteGroup and Jaguar Animal

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

By analyzing existing cross correlation between PulteGroup and Jaguar Animal Health, you can compare the effects of market volatilities on PulteGroup and Jaguar Animal 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 PulteGroup with a short position of Jaguar Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PulteGroup and Jaguar Animal.

Diversification Opportunities for PulteGroup and Jaguar Animal

0.34

Correlation Coefficient

PulteGroup  Jaguar Animal

Weak diversification

The 3 months correlation between PulteGroup and Jaguar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PulteGroup and Jaguar Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaguar Animal Health and PulteGroup 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 PulteGroup are associated (or correlated) with Jaguar Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaguar Animal Health has no effect on the direction of PulteGroup i.e., PulteGroup and Jaguar Animal go up and down completely randomly.

Pair Corralation between PulteGroup and Jaguar Animal

Considering the 90-day investment horizon PulteGroup is expected to generate 18.84 times less return on investment than Jaguar Animal. But when comparing it to its historical volatility, PulteGroup is 9.63 times less risky than Jaguar Animal. It trades about 0.18 of its potential returns per unit of risk. Jaguar Animal Health is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Jaguar Animal Health on February 11, 2024 and sell it today you would earn a total of  18.00  from holding Jaguar Animal Health or generate 163.64% return on investment over 90 days.

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

PulteGroup  vs.  Jaguar Animal Health

PulteGroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PulteGroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical indicators, PulteGroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Jaguar Animal Health

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jaguar Animal Health are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Jaguar Animal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PulteGroup and Jaguar Animal

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

The idea behind PulteGroup and Jaguar Animal Health 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.