Correlation Between ReTo Eco and Jeld Wen

Can any of the company-specific risk be diversified away by investing in both ReTo Eco and Jeld Wen 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 ReTo Eco and Jeld Wen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ReTo Eco Solutions and Jeld Wen Holding, you can compare the effects of market volatilities on ReTo Eco and Jeld Wen 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 ReTo Eco with a short position of Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReTo Eco and Jeld Wen.

Diversification Opportunities for ReTo Eco and Jeld Wen

0.85

Correlation Coefficient

ReTo Eco  Jeld Wen

Very poor diversification

The 3 months correlation between ReTo and Jeld is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding and ReTo Eco 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 ReTo Eco Solutions are associated (or correlated) with Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of ReTo Eco i.e., ReTo Eco and Jeld Wen go up and down completely randomly.

Pair Corralation between ReTo Eco and Jeld Wen

Given the investment horizon of 90 days ReTo Eco Solutions is expected to under-perform the Jeld Wen. In addition to that, ReTo Eco is 1.92 times more volatile than Jeld Wen Holding. It trades about -0.08 of its total potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.07 per unit of volatility. If you would invest  1,297  in Jeld Wen Holding on September 29, 2024 and sell it today you would lose (459.00) from holding Jeld Wen Holding or give up 35.39% of portfolio value over 90 days.

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

ReTo Eco Solutions  vs.  Jeld Wen Holding

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 unfluctuating 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.

Pair Trading with ReTo Eco and Jeld Wen

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

The idea behind ReTo Eco Solutions and Jeld Wen Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.