Correlation Between Jeld Wen and Johnson Controls

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

Diversification Opportunities for Jeld Wen and Johnson Controls

-0.56

Correlation Coefficient

Jeld Wen  Johnson Controls

Excellent diversification

The 3 months correlation between Jeld and Johnson is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Jeld Wen i.e., Jeld Wen and Johnson Controls go up and down completely randomly.

Pair Corralation between Jeld Wen and Johnson Controls

Given the investment horizon of 90 days Jeld Wen is expected to generate 4.63 times less return on investment than Johnson Controls. In addition to that, Jeld Wen is 2.1 times more volatile than Johnson Controls International. It trades about 0.0 of its total potential returns per unit of risk. Johnson Controls International is currently generating about 0.05 per unit of volatility. If you would invest  6,315  in Johnson Controls International on August 27, 2024 and sell it today you would earn a total of  2,030  from holding Johnson Controls International or generate 32.15% return on investment over 90 days.

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

Jeld Wen Holding  vs.  Johnson Controls International

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 weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Johnson Controls Int

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Controls International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Johnson Controls demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeld Wen and Johnson Controls

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

The idea behind Jeld Wen Holding and Johnson Controls International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.