Correlation Between John Wiley and Cardlytics

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

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

Diversification Opportunities for John Wiley and Cardlytics

0.31

Correlation Coefficient

John Wiley  Cardlytics

Weak diversification

The 3 months correlation between John and Cardlytics is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons and Cardlytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardlytics and John Wiley 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 John Wiley Sons are associated (or correlated) with Cardlytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardlytics has no effect on the direction of John Wiley i.e., John Wiley and Cardlytics go up and down completely randomly.

Pair Corralation between John Wiley and Cardlytics

Given the investment horizon of 90 days John Wiley is expected to generate 2.64 times less return on investment than Cardlytics. But when comparing it to its historical volatility, John Wiley Sons is 4.74 times less risky than Cardlytics. It trades about 0.1 of its potential returns per unit of risk. Cardlytics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  850.00  in Cardlytics on February 29, 2024 and sell it today you would earn a total of  130.00  from holding Cardlytics or generate 15.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.97%
Values	Daily Returns

John Wiley Sons  vs.  Cardlytics

John Wiley Sons

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Wiley Sons are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, John Wiley sustained solid returns over the last few months and may actually be approaching a breakup point.

Cardlytics

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with John Wiley and Cardlytics

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

The idea behind John Wiley Sons and Cardlytics 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.