Correlation Between FLJ and J W
Can any of the company-specific risk be diversified away by investing in both FLJ and J W 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 FLJ and J W into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLJ Group and J W Mays, you can compare the effects of market volatilities on FLJ and J W 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 FLJ with a short position of J W. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLJ and J W.
Diversification Opportunities for FLJ and J W
Average diversification
The 3 months correlation between FLJ and MAYS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FLJ Group and J W Mays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J W Mays and FLJ 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 FLJ Group are associated (or correlated) with J W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J W Mays has no effect on the direction of FLJ i.e., FLJ and J W go up and down completely randomly.
Pair Corralation between FLJ and J W
Considering the 90-day investment horizon FLJ is expected to generate 92.43 times less return on investment than J W. But when comparing it to its historical volatility, FLJ Group is 6.54 times less risky than J W. It trades about 0.01 of its potential returns per unit of risk. J W Mays is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,401 in J W Mays on September 2, 2024 and sell it today you would lose (183.00) from holding J W Mays or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 53.98% |
| Values | Daily Returns |
FLJ Group vs. J W Mays
Performance |
| Timeline |
| FLJ Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| J W Mays |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FLJ and J W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLJ and J W
The main advantage of trading using opposite FLJ and J W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLJ position performs unexpectedly, J W 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 W will offset losses from the drop in J W's long position.The idea behind FLJ Group and J W Mays 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 W vs. Marcus Millichap | J W vs. FirstService Corp | J W vs. Maui Land Pineapple | J W vs. Frp Holdings Ord |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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