Correlation Between FG Group and Johnson Outdoors

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

By analyzing existing cross correlation between FG Group Holdings and Johnson Outdoors, you can compare the effects of market volatilities on FG Group 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 FG Group with a short position of Johnson Outdoors. Check out your portfolio center. Please also check ongoing floating volatility patterns of FG Group and Johnson Outdoors.

Diversification Opportunities for FG Group and Johnson Outdoors

0.24

Correlation Coefficient

FG Group  Johnson Outdoors

Modest diversification

The 3 months correlation between FGH and Johnson is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FG Group Holdings and Johnson Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Outdoors and FG Group 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 FG Group Holdings 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 FG Group i.e., FG Group and Johnson Outdoors go up and down completely randomly.

Pair Corralation between FG Group and Johnson Outdoors

Considering the 90-day investment horizon FG Group Holdings is expected to under-perform the Johnson Outdoors. In addition to that, FG Group is 1.77 times more volatile than Johnson Outdoors. It trades about -0.06 of its total potential returns per unit of risk. Johnson Outdoors is currently generating about -0.05 per unit of volatility. If you would invest  6,373  in Johnson Outdoors on October 25, 2024 and sell it today you would lose (3,047) from holding Johnson Outdoors or give up 47.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	23.89%
Values	Daily Returns

FG Group Holdings  vs.  Johnson Outdoors

FG Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FG Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, FG Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Johnson Outdoors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Outdoors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Johnson Outdoors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FG Group and Johnson Outdoors

The main advantage of trading using opposite FG Group and Johnson Outdoors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FG Group 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.

The idea behind FG Group Holdings and Johnson Outdoors 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.