Correlation Between Ford and J JILL
Can any of the company-specific risk be diversified away by investing in both Ford and J JILL 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 Ford and J JILL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and J JILL INC, you can compare the effects of market volatilities on Ford and J JILL 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 Ford with a short position of J JILL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and J JILL.
Diversification Opportunities for Ford and J JILL
Very weak diversification
The 3 months correlation between Ford and 1MJ1 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and J JILL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J JILL INC and Ford 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 Ford Motor are associated (or correlated) with J JILL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J JILL INC has no effect on the direction of Ford i.e., Ford and J JILL go up and down completely randomly.
Pair Corralation between Ford and J JILL
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the J JILL. In addition to that, Ford is 1.05 times more volatile than J JILL INC. It trades about 0.0 of its total potential returns per unit of risk. J JILL INC is currently generating about 0.23 per unit of volatility. If you would invest 2,280 in J JILL INC on August 28, 2024 and sell it today you would earn a total of 300.00 from holding J JILL INC or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. J JILL INC
Performance |
| Timeline |
| Ford Motor |
| J JILL INC |
Ford and J JILL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and J JILL
The main advantage of trading using opposite Ford and J JILL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, J JILL 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 J JILL will offset losses from the drop in J JILL's long position.The idea behind Ford Motor and J JILL 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.| J JILL vs. RETAIL FOOD GROUP | J JILL vs. Auto Trader Group | J JILL vs. AUTO TRADER ADR | J JILL vs. Canadian Utilities Limited |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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