Correlation Between Wayfair and JJill

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

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

Diversification Opportunities for Wayfair and JJill

-0.01

Correlation Coefficient

Wayfair  JJill

Good diversification

The 3 months correlation between Wayfair and JJill is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc and Wayfair 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 Wayfair are associated (or correlated) with JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Wayfair i.e., Wayfair and JJill go up and down completely randomly.

Pair Corralation between Wayfair and JJill

Taking into account the 90-day investment horizon Wayfair is expected to under-perform the JJill. In addition to that, Wayfair is 1.55 times more volatile than JJill Inc. It trades about -0.07 of its total potential returns per unit of risk. JJill Inc is currently generating about -0.08 per unit of volatility. If you would invest  2,786  in JJill Inc on September 25, 2024 and sell it today you would lose (135.00) from holding JJill Inc or give up 4.85% of portfolio value over 90 days.

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

Wayfair  vs.  JJill Inc

Wayfair

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wayfair has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

JJill Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wayfair and JJill

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

The idea behind Wayfair and JJill Inc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.