Correlation Between Johnson Outdoors and First Business
Can any of the company-specific risk be diversified away by investing in both Johnson Outdoors and First Business 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 Johnson Outdoors and First Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Outdoors and First Business Financial, you can compare the effects of market volatilities on Johnson Outdoors and First Business 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 Johnson Outdoors with a short position of First Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Outdoors and First Business.
Diversification Opportunities for Johnson Outdoors and First Business
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and First is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Outdoors and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business Financial and Johnson Outdoors 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 Johnson Outdoors are associated (or correlated) with First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of Johnson Outdoors i.e., Johnson Outdoors and First Business go up and down completely randomly.
Pair Corralation between Johnson Outdoors and First Business
Given the investment horizon of 90 days Johnson Outdoors is expected to generate 4.43 times less return on investment than First Business. But when comparing it to its historical volatility, Johnson Outdoors is 1.81 times less risky than First Business. It trades about 0.1 of its potential returns per unit of risk. First Business Financial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,268 in First Business Financial on August 26, 2024 and sell it today you would earn a total of 780.00 from holding First Business Financial or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Outdoors vs. First Business Financial
Performance |
| Timeline |
| Johnson Outdoors |
| First Business Financial |
Johnson Outdoors and First Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Outdoors and First Business
The main advantage of trading using opposite Johnson Outdoors and First Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Outdoors position performs unexpectedly, First Business 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 First Business will offset losses from the drop in First Business' long position.| Johnson Outdoors vs. Vista Outdoor | Johnson Outdoors vs. Clarus Corp | Johnson Outdoors vs. Escalade Incorporated | Johnson Outdoors vs. JAKKS Pacific |
| First Business vs. Fifth Third Bancorp | First Business vs. Zions Bancorporation | First Business vs. Huntington Bancshares Incorporated | First Business vs. PNC Financial Services |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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