Correlation Between Jeld Wen and Transurban

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

Diversification Opportunities for Jeld Wen and Transurban

0.4

Correlation Coefficient

Jeld Wen  Transurban

Very weak diversification

The 3 months correlation between Jeld and Transurban is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Jeld Wen i.e., Jeld Wen and Transurban go up and down completely randomly.

Pair Corralation between Jeld Wen and Transurban

Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the Transurban. In addition to that, Jeld Wen is 1.93 times more volatile than Transurban Group. It trades about -0.08 of its total potential returns per unit of risk. Transurban Group is currently generating about -0.08 per unit of volatility. If you would invest  920.00  in Transurban Group on September 13, 2024 and sell it today you would lose (118.00) from holding Transurban Group or give up 12.83% of portfolio value over 90 days.

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

Jeld Wen Holding  vs.  Transurban Group

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Transurban Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Jeld Wen and Transurban

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

The idea behind Jeld Wen Holding and Transurban Group 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.