Correlation Between Canada Goose and Jeld Wen

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

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

Diversification Opportunities for Canada Goose and Jeld Wen

-0.51

Correlation Coefficient

Canada Goose  Jeld Wen

Excellent diversification

The 3 months correlation between Canada and Jeld is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding and Canada Goose 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 Canada Goose Holdings are associated (or correlated) with Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Canada Goose i.e., Canada Goose and Jeld Wen go up and down completely randomly.

Pair Corralation between Canada Goose and Jeld Wen

Given the investment horizon of 90 days Canada Goose Holdings is expected to under-perform the Jeld Wen. But the stock apears to be less risky and, when comparing its historical volatility, Canada Goose Holdings is 1.78 times less risky than Jeld Wen. The stock trades about -0.18 of its potential returns per unit of risk. The Jeld Wen Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,118  in Jeld Wen Holding on January 31, 2024 and sell it today you would lose (18.00) from holding Jeld Wen Holding or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Canada Goose Holdings  vs.  Jeld Wen Holding

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canada Goose is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Jeld Wen Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jeld Wen Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Jeld Wen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canada Goose and Jeld Wen

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

The idea behind Canada Goose Holdings and Jeld Wen Holding 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.