Correlation Between JJill and Primo Brands

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

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

Diversification Opportunities for JJill and Primo Brands

0.78

Correlation Coefficient

JJill  Primo Brands

Poor diversification

The 3 months correlation between JJill and Primo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding JJill Inc and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands and JJill 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 JJill Inc are associated (or correlated) with Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of JJill i.e., JJill and Primo Brands go up and down completely randomly.

Pair Corralation between JJill and Primo Brands

Given the investment horizon of 90 days JJill is expected to generate 2.75 times less return on investment than Primo Brands. In addition to that, JJill is 1.74 times more volatile than Primo Brands. It trades about 0.02 of its total potential returns per unit of risk. Primo Brands is currently generating about 0.1 per unit of volatility. If you would invest  1,429  in Primo Brands on October 5, 2024 and sell it today you would earn a total of  1,670  from holding Primo Brands or generate 116.86% return on investment over 90 days.

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

JJill Inc  vs.  Primo Brands

JJill Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Primo Brands

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JJill and Primo Brands

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

The idea behind JJill Inc and Primo Brands 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.