Correlation Between JS Global and Purple Innovation

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

By analyzing existing cross correlation between JS Global Lifestyle and Purple Innovation, you can compare the effects of market volatilities on JS Global and Purple Innovation 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 JS Global with a short position of Purple Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Global and Purple Innovation.

Diversification Opportunities for JS Global and Purple Innovation

-0.48

Correlation Coefficient

JS Global  Purple Innovation

Very good diversification

The 3 months correlation between JGLCF and Purple is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding JS Global Lifestyle and Purple Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purple Innovation and JS Global 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 JS Global Lifestyle are associated (or correlated) with Purple Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purple Innovation has no effect on the direction of JS Global i.e., JS Global and Purple Innovation go up and down completely randomly.

Pair Corralation between JS Global and Purple Innovation

Assuming the 90 days horizon JS Global Lifestyle is expected to generate 1.05 times more return on investment than Purple Innovation. However, JS Global is 1.05 times more volatile than Purple Innovation. It trades about 0.04 of its potential returns per unit of risk. Purple Innovation is currently generating about -0.04 per unit of risk. If you would invest  16.00  in JS Global Lifestyle on September 14, 2024 and sell it today you would earn a total of  1.00  from holding JS Global Lifestyle or generate 6.25% return on investment over 90 days.

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

JS Global Lifestyle  vs.  Purple Innovation

JS Global Lifestyle

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JS Global Lifestyle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, JS Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Purple Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Purple Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with JS Global and Purple Innovation

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

The idea behind JS Global Lifestyle and Purple Innovation 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.