Correlation Between Spotify Technology and Jefferies Financial

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Can any of the company-specific risk be diversified away by investing in both Spotify Technology and Jefferies Financial 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 Spotify Technology and Jefferies Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Jefferies Financial Group, you can compare the effects of market volatilities on Spotify Technology and Jefferies Financial 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 Spotify Technology with a short position of Jefferies Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Jefferies Financial.

Diversification Opportunities for Spotify Technology and Jefferies Financial

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Spotify and Jefferies is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Spotify Technology i.e., Spotify Technology and Jefferies Financial go up and down completely randomly.

Pair Corralation between Spotify Technology and Jefferies Financial

Assuming the 90 days trading horizon Spotify Technology is expected to generate 1.34 times less return on investment than Jefferies Financial. In addition to that, Spotify Technology is 1.22 times more volatile than Jefferies Financial Group. It trades about 0.08 of its total potential returns per unit of risk. Jefferies Financial Group is currently generating about 0.13 per unit of volatility. If you would invest  26,187  in Jefferies Financial Group on April 23, 2025 and sell it today you would earn a total of  4,653  from holding Jefferies Financial Group or generate 17.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

Spotify Technology SA  vs.  Jefferies Financial Group

 Performance 
       Timeline  
Spotify Technology 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Spotify Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
Jefferies Financial 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Jefferies Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Jefferies Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Spotify Technology and Jefferies Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spotify Technology and Jefferies Financial

The main advantage of trading using opposite Spotify Technology and Jefferies Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology position performs unexpectedly, Jefferies Financial 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 Jefferies Financial will offset losses from the drop in Jefferies Financial's long position.
The idea behind Spotify Technology SA and Jefferies Financial Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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