Correlation Between John Bean and Watts Water
Can any of the company-specific risk be diversified away by investing in both John Bean and Watts Water 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 Bean and Watts Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and Watts Water Technologies, you can compare the effects of market volatilities on John Bean and Watts Water 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 Bean with a short position of Watts Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Watts Water.
Diversification Opportunities for John Bean and Watts Water
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Watts is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Watts Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watts Water Technologies and John Bean 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 Bean Technologies are associated (or correlated) with Watts Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watts Water Technologies has no effect on the direction of John Bean i.e., John Bean and Watts Water go up and down completely randomly.
Pair Corralation between John Bean and Watts Water
Considering the 90-day investment horizon John Bean Technologies is expected to generate 1.52 times more return on investment than Watts Water. However, John Bean is 1.52 times more volatile than Watts Water Technologies. It trades about 0.03 of its potential returns per unit of risk. Watts Water Technologies is currently generating about 0.03 per unit of risk. If you would invest 10,451 in John Bean Technologies on August 24, 2024 and sell it today you would earn a total of 1,467 from holding John Bean Technologies or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. Watts Water Technologies
Performance |
| Timeline |
| John Bean Technologies |
| Watts Water Technologies |
John Bean and Watts Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and Watts Water
The main advantage of trading using opposite John Bean and Watts Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, Watts Water 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 Watts Water will offset losses from the drop in Watts Water's long position.| John Bean vs. Small Cap Core | John Bean vs. Freedom Holding Corp | John Bean vs. Gfl Environmental Holdings | John Bean vs. Growth Fund Of |
| Watts Water vs. IDEX Corporation | Watts Water vs. Donaldson | Watts Water vs. Gorman Rupp | Watts Water vs. Enerpac Tool Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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