Correlation Between Great Lakes and JNS Holdings

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

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

Diversification Opportunities for Great Lakes and JNS Holdings

-0.08

Correlation Coefficient

Great Lakes  JNS Holdings

Good diversification

The 3 months correlation between Great and JNS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and JNS Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JNS Holdings Corp and Great Lakes 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 Great Lakes Dredge are associated (or correlated) with JNS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JNS Holdings Corp has no effect on the direction of Great Lakes i.e., Great Lakes and JNS Holdings go up and down completely randomly.

Pair Corralation between Great Lakes and JNS Holdings

Given the investment horizon of 90 days Great Lakes Dredge is expected to under-perform the JNS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Great Lakes Dredge is 4.39 times less risky than JNS Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The JNS Holdings Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  0.28  in JNS Holdings Corp on October 11, 2024 and sell it today you would lose (0.03) from holding JNS Holdings Corp or give up 10.71% of portfolio value over 90 days.

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

Great Lakes Dredge  vs.  JNS Holdings Corp

Great Lakes Dredge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Lakes Dredge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Great Lakes is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

JNS Holdings Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JNS Holdings Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, JNS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Lakes and JNS Holdings

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

The idea behind Great Lakes Dredge and JNS Holdings Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.