Correlation Between Daily Journal and Stagwell

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

By analyzing existing cross correlation between Daily Journal Corp and Stagwell, you can compare the effects of market volatilities on Daily Journal and Stagwell 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 Daily Journal with a short position of Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daily Journal and Stagwell.

Diversification Opportunities for Daily Journal and Stagwell

0.72

Correlation Coefficient

Daily Journal  Stagwell

Poor diversification

The 3 months correlation between Daily and Stagwell is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and Daily Journal 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 Daily Journal Corp are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Daily Journal i.e., Daily Journal and Stagwell go up and down completely randomly.

Pair Corralation between Daily Journal and Stagwell

Given the investment horizon of 90 days Daily Journal Corp is expected to generate 1.15 times more return on investment than Stagwell. However, Daily Journal is 1.15 times more volatile than Stagwell. It trades about 0.12 of its potential returns per unit of risk. Stagwell is currently generating about 0.09 per unit of risk. If you would invest  46,951  in Daily Journal Corp on September 2, 2024 and sell it today you would earn a total of  9,500  from holding Daily Journal Corp or generate 20.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Daily Journal Corp  vs.  Stagwell

Daily Journal Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daily Journal Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Daily Journal displayed solid returns over the last few months and may actually be approaching a breakup point.

Stagwell

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Stagwell showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daily Journal and Stagwell

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

The idea behind Daily Journal Corp and Stagwell 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.