Correlation Between Jeld Wen and Nike

Can any of the company-specific risk be diversified away by investing in both Jeld Wen and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Jeld Wen and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and Nike.

Diversification Opportunities for Jeld Wen and Nike

-0.58

Correlation Coefficient

Jeld Wen  Nike

Excellent diversification

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

Pair Corralation between Jeld Wen and Nike

Given the investment horizon of 90 days Jeld Wen Holding is expected to generate 2.8 times more return on investment than Nike. However, Jeld Wen is 2.8 times more volatile than Nike Inc. It trades about 0.01 of its potential returns per unit of risk. Nike Inc is currently generating about -0.01 per unit of risk. 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

Jeld Wen Holding  vs.  Nike Inc

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.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Jeld Wen and Nike

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

The idea behind Jeld Wen Holding and Nike Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.