Correlation Between Johnson Outdoors and Acushnet Holdings

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

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

Diversification Opportunities for Johnson Outdoors and Acushnet Holdings

0.64

Correlation Coefficient

Johnson Outdoors  Acushnet Holdings

Poor diversification

The 3 months correlation between Johnson and Acushnet is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Outdoors and Acushnet Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acushnet Holdings Corp and Johnson Outdoors 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 Johnson Outdoors are associated (or correlated) with Acushnet Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acushnet Holdings Corp has no effect on the direction of Johnson Outdoors i.e., Johnson Outdoors and Acushnet Holdings go up and down completely randomly.

Pair Corralation between Johnson Outdoors and Acushnet Holdings

Given the investment horizon of 90 days Johnson Outdoors is expected to under-perform the Acushnet Holdings. In addition to that, Johnson Outdoors is 1.07 times more volatile than Acushnet Holdings Corp. It trades about -0.18 of its total potential returns per unit of risk. Acushnet Holdings Corp is currently generating about -0.02 per unit of volatility. If you would invest  7,001  in Acushnet Holdings Corp on December 30, 2024 and sell it today you would lose (269.00) from holding Acushnet Holdings Corp or give up 3.84% of portfolio value over 90 days.

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

Johnson Outdoors  vs.  Acushnet Holdings Corp

Johnson Outdoors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Johnson Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Acushnet Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acushnet Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Acushnet Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Johnson Outdoors and Acushnet Holdings

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

The idea behind Johnson Outdoors and Acushnet 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.