Correlation Between JAR and DGTX

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

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

Diversification Opportunities for JAR and DGTX

0.86

Correlation Coefficient

JAR  DGTX

Very poor diversification

The 3 months correlation between JAR and DGTX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JAR and DGTX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTX and JAR 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 JAR are associated (or correlated) with DGTX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTX has no effect on the direction of JAR i.e., JAR and DGTX go up and down completely randomly.

Pair Corralation between JAR and DGTX

Assuming the 90 days trading horizon JAR is expected to generate 0.47 times more return on investment than DGTX. However, JAR is 2.14 times less risky than DGTX. It trades about 0.12 of its potential returns per unit of risk. DGTX is currently generating about -0.03 per unit of risk. If you would invest  0.26  in JAR on August 23, 2024 and sell it today you would earn a total of  0.07  from holding JAR or generate 29.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

JAR  vs.  DGTX

JAR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JAR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

DGTX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DGTX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for DGTX shareholders.

Pair Trading with JAR and DGTX

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

The idea behind JAR and DGTX 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.