Correlation Between John Wiley and Ross Stores

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

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

Diversification Opportunities for John Wiley and Ross Stores

-0.12

Correlation Coefficient

John Wiley  Ross Stores

Good diversification

The 3 months correlation between John and Ross is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and John Wiley 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 John Wiley Sons are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of John Wiley i.e., John Wiley and Ross Stores go up and down completely randomly.

Pair Corralation between John Wiley and Ross Stores

Given the investment horizon of 90 days John Wiley Sons is expected to under-perform the Ross Stores. In addition to that, John Wiley is 1.3 times more volatile than Ross Stores. It trades about -0.04 of its total potential returns per unit of risk. Ross Stores is currently generating about -0.01 per unit of volatility. If you would invest  14,963  in Ross Stores on September 22, 2024 and sell it today you would lose (184.00) from holding Ross Stores or give up 1.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

John Wiley Sons  vs.  Ross Stores

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.

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.

Pair Trading with John Wiley and Ross Stores

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

The idea behind John Wiley Sons and Ross Stores 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.