Correlation Between Universal Electronics and JJill

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

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

Diversification Opportunities for Universal Electronics and JJill

0.43

Correlation Coefficient

Universal Electronics  JJill

Very weak diversification

The 3 months correlation between Universal and JJill is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc and Universal Electronics 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 Universal Electronics are associated (or correlated) with JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Universal Electronics i.e., Universal Electronics and JJill go up and down completely randomly.

Pair Corralation between Universal Electronics and JJill

Given the investment horizon of 90 days Universal Electronics is expected to under-perform the JJill. In addition to that, Universal Electronics is 1.29 times more volatile than JJill Inc. It trades about -0.03 of its total potential returns per unit of risk. JJill Inc is currently generating about 0.05 per unit of volatility. If you would invest  1,876  in JJill Inc on February 16, 2024 and sell it today you would earn a total of  1,294  from holding JJill Inc or generate 68.98% return on investment over 90 days.

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

Universal Electronics  vs.  JJill Inc

Universal Electronics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Universal Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

JJill Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Electronics and JJill

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

The idea behind Universal Electronics and JJill 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.