Correlation Between USDD and JUST

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

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

Diversification Opportunities for USDD and JUST

0.32

Correlation Coefficient

USDD  JUST

Weak diversification

The 3 months correlation between USDD and JUST is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding USDD and JUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JUST and USDD 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 USDD are associated (or correlated) with JUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JUST has no effect on the direction of USDD i.e., USDD and JUST go up and down completely randomly.

Pair Corralation between USDD and JUST

Assuming the 90 days trading horizon USDD is expected to generate 24.21 times less return on investment than JUST. But when comparing it to its historical volatility, USDD is 3.73 times less risky than JUST. It trades about 0.01 of its potential returns per unit of risk. JUST is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2.23  in JUST on April 16, 2025 and sell it today you would earn a total of  1.38  from holding JUST or generate 61.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

USDD  vs.  JUST

USDD

Risk-Adjusted Performance

Very Weak

Over the last 90 days USDD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, USDD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

JUST

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JUST are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, JUST exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with USDD and JUST

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

The idea behind USDD and JUST 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.