Correlation Between Jeld Wen and Limbach Holdings
Can any of the company-specific risk be diversified away by investing in both Jeld Wen and Limbach Holdings 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 Jeld Wen and Limbach Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeld Wen Holding and Limbach Holdings, you can compare the effects of market volatilities on Jeld Wen and Limbach Holdings 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 Jeld Wen with a short position of Limbach Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and Limbach Holdings.
Diversification Opportunities for Jeld Wen and Limbach Holdings
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jeld and Limbach is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and Limbach Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limbach Holdings and Jeld Wen 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 Jeld Wen Holding are associated (or correlated) with Limbach Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limbach Holdings has no effect on the direction of Jeld Wen i.e., Jeld Wen and Limbach Holdings go up and down completely randomly.
Pair Corralation between Jeld Wen and Limbach Holdings
Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the Limbach Holdings. In addition to that, Jeld Wen is 1.43 times more volatile than Limbach Holdings. It trades about -0.12 of its total potential returns per unit of risk. Limbach Holdings is currently generating about 0.22 per unit of volatility. If you would invest 7,878 in Limbach Holdings on August 30, 2024 and sell it today you would earn a total of 1,998 from holding Limbach Holdings or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeld Wen Holding vs. Limbach Holdings
Performance |
| Timeline |
| Jeld Wen Holding |
| Limbach Holdings |
Jeld Wen and Limbach Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeld Wen and Limbach Holdings
The main advantage of trading using opposite Jeld Wen and Limbach Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen position performs unexpectedly, Limbach Holdings 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 Limbach Holdings will offset losses from the drop in Limbach Holdings' long position.| Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Quanex Building Products | Jeld Wen vs. Perma Pipe International Holdings | Jeld Wen vs. Interface |
| Limbach Holdings vs. MYR Group | Limbach Holdings vs. Granite Construction Incorporated | Limbach Holdings vs. Construction Partners | Limbach Holdings vs. Great Lakes Dredge |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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