Correlation Between Ralph Lauren and JJill
Can any of the company-specific risk be diversified away by investing in both Ralph Lauren and JJill 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 Ralph Lauren and JJill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ralph Lauren Corp and JJill Inc, you can compare the effects of market volatilities on Ralph Lauren and JJill 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 Ralph Lauren with a short position of JJill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ralph Lauren and JJill.
Diversification Opportunities for Ralph Lauren and JJill
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ralph and JJill is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and JJill go up and down completely randomly.
Pair Corralation between Ralph Lauren and JJill
Allowing for the 90-day total investment horizon Ralph Lauren is expected to generate 1.1 times less return on investment than JJill. But when comparing it to its historical volatility, Ralph Lauren Corp is 1.51 times less risky than JJill. It trades about 0.18 of its potential returns per unit of risk. JJill Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,594 in JJill Inc on September 12, 2024 and sell it today you would earn a total of 172.00 from holding JJill Inc or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ralph Lauren Corp vs. JJill Inc
Performance |
| Timeline |
| Ralph Lauren Corp |
| JJill Inc |
Ralph Lauren and JJill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ralph Lauren and JJill
The main advantage of trading using opposite Ralph Lauren and JJill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ralph Lauren position performs unexpectedly, JJill 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 JJill will offset losses from the drop in JJill's long position.| Ralph Lauren vs. J Long Group Limited | Ralph Lauren vs. Under Armour C | Ralph Lauren vs. Vince Holding Corp | Ralph Lauren vs. Figs Inc |
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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