Correlation Between Callaway Golf and Johnson Outdoors
Can any of the company-specific risk be diversified away by investing in both Callaway Golf and Johnson Outdoors 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 Callaway Golf and Johnson Outdoors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Callaway Golf and Johnson Outdoors, you can compare the effects of market volatilities on Callaway Golf and Johnson Outdoors 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 Callaway Golf with a short position of Johnson Outdoors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Callaway Golf and Johnson Outdoors.
Diversification Opportunities for Callaway Golf and Johnson Outdoors
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Callaway and Johnson is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Callaway Golf and Johnson Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Outdoors and Callaway Golf 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 Callaway Golf are associated (or correlated) with Johnson Outdoors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Outdoors has no effect on the direction of Callaway Golf i.e., Callaway Golf and Johnson Outdoors go up and down completely randomly.
Pair Corralation between Callaway Golf and Johnson Outdoors
Given the investment horizon of 90 days Callaway Golf is expected to under-perform the Johnson Outdoors. In addition to that, Callaway Golf is 1.64 times more volatile than Johnson Outdoors. It trades about -0.16 of its total potential returns per unit of risk. Johnson Outdoors is currently generating about 0.13 per unit of volatility. If you would invest 3,259 in Johnson Outdoors on August 27, 2024 and sell it today you would earn a total of 168.00 from holding Johnson Outdoors or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Callaway Golf vs. Johnson Outdoors
Performance |
| Timeline |
| Callaway Golf |
| Johnson Outdoors |
Callaway Golf and Johnson Outdoors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Callaway Golf and Johnson Outdoors
The main advantage of trading using opposite Callaway Golf and Johnson Outdoors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callaway Golf position performs unexpectedly, Johnson Outdoors 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 Johnson Outdoors will offset losses from the drop in Johnson Outdoors' long position.| Callaway Golf vs. Bowlero Corp | Callaway Golf vs. Johnson Outdoors | Callaway Golf vs. YETI Holdings | Callaway Golf vs. Xponential Fitness |
| Johnson Outdoors vs. Vista Outdoor | Johnson Outdoors vs. Clarus Corp | Johnson Outdoors vs. Escalade Incorporated | Johnson Outdoors vs. JAKKS Pacific |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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