Correlation Between Dave Busters and Jetblack Corp

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

By analyzing existing cross correlation between Dave Busters Entertainment and Jetblack Corp, you can compare the effects of market volatilities on Dave Busters and Jetblack Corp 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 Dave Busters with a short position of Jetblack Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Jetblack Corp.

Diversification Opportunities for Dave Busters and Jetblack Corp

-0.21

Correlation Coefficient

Dave Busters  Jetblack Corp

Very good diversification

The 3 months correlation between Dave and Jetblack is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Jetblack Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jetblack Corp and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Jetblack Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jetblack Corp has no effect on the direction of Dave Busters i.e., Dave Busters and Jetblack Corp go up and down completely randomly.

Pair Corralation between Dave Busters and Jetblack Corp

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Jetblack Corp. But the stock apears to be less risky and, when comparing its historical volatility, Dave Busters Entertainment is 2.63 times less risky than Jetblack Corp. The stock trades about -0.27 of its potential returns per unit of risk. The Jetblack Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.39  in Jetblack Corp on January 29, 2024 and sell it today you would earn a total of  0.02  from holding Jetblack Corp or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dave Busters Entertainment  vs.  Jetblack Corp

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jetblack Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jetblack Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Jetblack Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Jetblack Corp

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

The idea behind Dave Busters Entertainment and Jetblack Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.