Correlation Between Jack In and Red Rock

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

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

Diversification Opportunities for Jack In and Red Rock

-0.39

Correlation Coefficient

Jack In  Red Rock

Very good diversification

The 3 months correlation between Jack and Red is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock Resorts and Jack In 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 Jack In The are associated (or correlated) with Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of Jack In i.e., Jack In and Red Rock go up and down completely randomly.

Pair Corralation between Jack In and Red Rock

Given the investment horizon of 90 days Jack In The is expected to under-perform the Red Rock. But the stock apears to be less risky and, when comparing its historical volatility, Jack In The is 1.54 times less risky than Red Rock. The stock trades about -0.41 of its potential returns per unit of risk. The Red Rock Resorts is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest  6,248  in Red Rock Resorts on February 3, 2024 and sell it today you would lose (896.00) from holding Red Rock Resorts or give up 14.34% of portfolio value over 90 days.

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

Jack In The  vs.  Red Rock Resorts

Jack In

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Red Rock Resorts

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Red Rock Resorts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Red Rock is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Jack In and Red Rock

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

The idea behind Jack In The and Red Rock Resorts 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.