Correlation Between ADTRAN and John Wiley

Can any of the company-specific risk be diversified away by investing in both ADTRAN and John Wiley 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 ADTRAN and John Wiley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADTRAN Inc and John Wiley Sons, you can compare the effects of market volatilities on ADTRAN and John Wiley 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 ADTRAN with a short position of John Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and John Wiley.

Diversification Opportunities for ADTRAN and John Wiley

0.38

Correlation Coefficient

ADTRAN  John Wiley

Weak diversification

The 3 months correlation between ADTRAN and John is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and John Wiley Sons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wiley Sons and ADTRAN 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 ADTRAN Inc are associated (or correlated) with John Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wiley Sons has no effect on the direction of ADTRAN i.e., ADTRAN and John Wiley go up and down completely randomly.

Pair Corralation between ADTRAN and John Wiley

Given the investment horizon of 90 days ADTRAN is expected to generate 74.06 times less return on investment than John Wiley. But when comparing it to its historical volatility, ADTRAN Inc is 35.42 times less risky than John Wiley. It trades about 0.05 of its potential returns per unit of risk. John Wiley Sons is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,870  in John Wiley Sons on September 2, 2024 and sell it today you would earn a total of  2,420  from holding John Wiley Sons or generate 84.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.82%
Values	Daily Returns

ADTRAN Inc  vs.  John Wiley Sons

ADTRAN Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ADTRAN Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ADTRAN displayed solid returns over the last few months and may actually be approaching a breakup point.

John Wiley Sons

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days John Wiley Sons has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating basic indicators, John Wiley sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADTRAN and John Wiley

The main advantage of trading using opposite ADTRAN and John Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN position performs unexpectedly, John Wiley 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 John Wiley will offset losses from the drop in John Wiley's long position.

The idea behind ADTRAN Inc and John Wiley Sons pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.