Correlation Between Aldel Financial and Raymond James

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

By analyzing existing cross correlation between Aldel Financial II and Raymond James Financial, you can compare the effects of market volatilities on Aldel Financial and Raymond James 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 Aldel Financial with a short position of Raymond James. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Raymond James.

Diversification Opportunities for Aldel Financial and Raymond James

0.7

Correlation Coefficient

Aldel Financial  Raymond James

Poor diversification

The 3 months correlation between Aldel and Raymond is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Raymond James Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raymond James Financial and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Raymond James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raymond James Financial has no effect on the direction of Aldel Financial i.e., Aldel Financial and Raymond James go up and down completely randomly.

Pair Corralation between Aldel Financial and Raymond James

Assuming the 90 days horizon Aldel Financial II is expected to under-perform the Raymond James. But the stock apears to be less risky and, when comparing its historical volatility, Aldel Financial II is 22.33 times less risky than Raymond James. The stock trades about -0.05 of its potential returns per unit of risk. The Raymond James Financial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  11,578  in Raymond James Financial on August 22, 2024 and sell it today you would earn a total of  4,684  from holding Raymond James Financial or generate 40.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	33.33%
Values	Daily Returns

Aldel Financial II  vs.  Raymond James Financial

Aldel Financial II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aldel Financial II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Raymond James Financial

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raymond James Financial are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward-looking indicators, Raymond James reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aldel Financial and Raymond James

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

The idea behind Aldel Financial II and Raymond James 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.