Correlation Between J Long and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both J Long and Shoe Carnival 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 J Long and Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Long Group Limited and Shoe Carnival, you can compare the effects of market volatilities on J Long and Shoe Carnival 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 J Long with a short position of Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Long and Shoe Carnival.
Diversification Opportunities for J Long and Shoe Carnival
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between J Long and Shoe is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding J Long Group Limited and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and J Long 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 J Long Group Limited are associated (or correlated) with Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of J Long i.e., J Long and Shoe Carnival go up and down completely randomly.
Pair Corralation between J Long and Shoe Carnival
Allowing for the 90-day total investment horizon J Long Group Limited is expected to generate 3.7 times more return on investment than Shoe Carnival. However, J Long is 3.7 times more volatile than Shoe Carnival. It trades about 0.13 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.26 per unit of risk. If you would invest 305.00 in J Long Group Limited on November 26, 2024 and sell it today you would earn a total of 186.00 from holding J Long Group Limited or generate 60.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
J Long Group Limited vs. Shoe Carnival
Performance |
Timeline |
J Long Group |
Shoe Carnival |
J Long and Shoe Carnival Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with J Long and Shoe Carnival
The main advantage of trading using opposite J Long and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Long position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.J Long vs. The Coca Cola | ||
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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