Correlation Between Employers Holdings and PJT Partners

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

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

Diversification Opportunities for Employers Holdings and PJT Partners

-0.35

Correlation Coefficient

Employers Holdings  PJT Partners

Very good diversification

The 3 months correlation between Employers and PJT is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners and Employers Holdings 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 Employers Holdings are associated (or correlated) with PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Employers Holdings i.e., Employers Holdings and PJT Partners go up and down completely randomly.

Pair Corralation between Employers Holdings and PJT Partners

Considering the 90-day investment horizon Employers Holdings is expected to generate 0.55 times more return on investment than PJT Partners. However, Employers Holdings is 1.81 times less risky than PJT Partners. It trades about 0.02 of its potential returns per unit of risk. PJT Partners is currently generating about -0.07 per unit of risk. If you would invest  5,015  in Employers Holdings on January 2, 2025 and sell it today you would earn a total of  49.00  from holding Employers Holdings or generate 0.98% return on investment over 90 days.

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

Employers Holdings  vs.  PJT Partners

Employers Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Employers Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

PJT Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days PJT Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Employers Holdings and PJT Partners

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

The idea behind Employers Holdings and PJT Partners 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.