Correlation Between Wolverine World and JJill
Can any of the company-specific risk be diversified away by investing in both Wolverine World 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 Wolverine World and JJill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wolverine World Wide and JJill Inc, you can compare the effects of market volatilities on Wolverine World 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 Wolverine World with a short position of JJill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolverine World and JJill.
Diversification Opportunities for Wolverine World and JJill
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wolverine and JJill is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc and Wolverine World 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 Wolverine World Wide 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 Wolverine World i.e., Wolverine World and JJill go up and down completely randomly.
Pair Corralation between Wolverine World and JJill
Considering the 90-day investment horizon Wolverine World Wide is expected to generate 1.0 times more return on investment than JJill. However, Wolverine World Wide is 1.0 times less risky than JJill. It trades about 0.0 of its potential returns per unit of risk. JJill Inc is currently generating about -0.48 per unit of risk. If you would invest 1,079 in Wolverine World Wide on February 1, 2024 and sell it today you would lose (5.00) from holding Wolverine World Wide or give up 0.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Wolverine World Wide vs. JJill Inc
Performance |
Timeline |
Wolverine World Wide |
JJill Inc |
Wolverine World and JJill Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wolverine World and JJill
The main advantage of trading using opposite Wolverine World and JJill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolverine World 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 Wolverine World Wide 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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