Correlation Between Ross Stores and John Wiley

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

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

Diversification Opportunities for Ross Stores and John Wiley

-0.14

Correlation Coefficient

Ross Stores  John Wiley

Good diversification

The 3 months correlation between Ross and John is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and John Wiley Sons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wiley Sons and Ross Stores 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 Ross Stores are associated (or correlated) with John Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wiley Sons has no effect on the direction of Ross Stores i.e., Ross Stores and John Wiley go up and down completely randomly.

Pair Corralation between Ross Stores and John Wiley

Given the investment horizon of 90 days Ross Stores is expected to generate 0.78 times more return on investment than John Wiley. However, Ross Stores is 1.28 times less risky than John Wiley. It trades about -0.02 of its potential returns per unit of risk. John Wiley Sons is currently generating about -0.04 per unit of risk. If you would invest  15,395  in Ross Stores on September 20, 2024 and sell it today you would lose (310.00) from holding Ross Stores or give up 2.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.6%
Values	Daily Returns

Ross Stores  vs.  John Wiley Sons

Ross Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

John Wiley Sons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Wiley Sons has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, John Wiley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ross Stores and John Wiley

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

The idea behind Ross Stores and John Wiley Sons 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.