Correlation Between Jeld Wen and Masonite International

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

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

Diversification Opportunities for Jeld Wen and Masonite International

-0.58

Correlation Coefficient

Jeld Wen  Masonite International

Excellent diversification

The 3 months correlation between Jeld and Masonite is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and Masonite International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masonite International and Jeld Wen 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 Jeld Wen Holding are associated (or correlated) with Masonite International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masonite International has no effect on the direction of Jeld Wen i.e., Jeld Wen and Masonite International go up and down completely randomly.

Pair Corralation between Jeld Wen and Masonite International

Given the investment horizon of 90 days Jeld Wen Holding is expected to generate 92.96 times more return on investment than Masonite International. However, Jeld Wen is 92.96 times more volatile than Masonite International Corp. It trades about 0.05 of its potential returns per unit of risk. Masonite International Corp is currently generating about 1.17 per unit of risk. If you would invest  1,397  in Jeld Wen Holding on March 9, 2024 and sell it today you would earn a total of  29.00  from holding Jeld Wen Holding or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	27.27%
Values	Daily Returns

Jeld Wen Holding  vs.  Masonite International Corp

Jeld Wen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Masonite International

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Masonite International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Masonite International 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 Jeld Wen and Masonite International

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

The idea behind Jeld Wen Holding and Masonite International Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.