Correlation Between Quadrise Plc and John Wood

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

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

Diversification Opportunities for Quadrise Plc and John Wood

-0.5

Correlation Coefficient

Quadrise Plc  John Wood

Very good diversification

The 3 months correlation between Quadrise and John is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Quadrise Plc and John Wood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wood Group and Quadrise Plc 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 Quadrise Plc are associated (or correlated) with John Wood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wood Group has no effect on the direction of Quadrise Plc i.e., Quadrise Plc and John Wood go up and down completely randomly.

Pair Corralation between Quadrise Plc and John Wood

Assuming the 90 days trading horizon Quadrise Plc is expected to generate 1.12 times more return on investment than John Wood. However, Quadrise Plc is 1.12 times more volatile than John Wood Group. It trades about 0.15 of its potential returns per unit of risk. John Wood Group is currently generating about -0.09 per unit of risk. If you would invest  169.00  in Quadrise Plc on September 3, 2024 and sell it today you would earn a total of  161.00  from holding Quadrise Plc or generate 95.27% return on investment over 90 days.

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

Quadrise Plc  vs.  John Wood Group

Quadrise Plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quadrise Plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Quadrise Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

John Wood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Wood Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic 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.

Pair Trading with Quadrise Plc and John Wood

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

The idea behind Quadrise Plc and John Wood 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.