Correlation Between AJ Bell and VeriSign

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

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

Diversification Opportunities for AJ Bell and VeriSign

0.69

Correlation Coefficient

AJ Bell  VeriSign

Poor diversification

The 3 months correlation between AJB and VeriSign is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AJ Bell plc and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign and AJ Bell 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 AJ Bell plc are associated (or correlated) with VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of AJ Bell i.e., AJ Bell and VeriSign go up and down completely randomly.

Pair Corralation between AJ Bell and VeriSign

Assuming the 90 days trading horizon AJ Bell plc is expected to generate 0.95 times more return on investment than VeriSign. However, AJ Bell plc is 1.06 times less risky than VeriSign. It trades about 0.26 of its potential returns per unit of risk. VeriSign is currently generating about 0.16 per unit of risk. If you would invest  41,008  in AJ Bell plc on April 20, 2025 and sell it today you would earn a total of  11,342  from holding AJ Bell plc or generate 27.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

AJ Bell plc  vs.  VeriSign

AJ Bell plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Bell plc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AJ Bell exhibited solid returns over the last few months and may actually be approaching a breakup point.

VeriSign

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VeriSign unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AJ Bell and VeriSign

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

The idea behind AJ Bell plc and VeriSign 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.