Correlation Between NioCorp Developments and Jeld Wen

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

By analyzing existing cross correlation between NioCorp Developments Ltd and Jeld Wen Holding, you can compare the effects of market volatilities on NioCorp Developments and Jeld Wen 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 NioCorp Developments with a short position of Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Jeld Wen.

Diversification Opportunities for NioCorp Developments and Jeld Wen

-0.36

Correlation Coefficient

NioCorp Developments  Jeld Wen

Very good diversification

The 3 months correlation between NioCorp and Jeld is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Jeld Wen go up and down completely randomly.

Pair Corralation between NioCorp Developments and Jeld Wen

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 10.87 times more return on investment than Jeld Wen. However, NioCorp Developments is 10.87 times more volatile than Jeld Wen Holding. It trades about 0.04 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.01 per unit of risk. If you would invest  91.00  in NioCorp Developments Ltd on November 20, 2024 and sell it today you would earn a total of  142.00  from holding NioCorp Developments Ltd or generate 156.04% return on investment over 90 days.

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

NioCorp Developments Ltd  vs.  Jeld Wen Holding

NioCorp Developments

Risk-Adjusted Performance

Good

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

Jeld Wen Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeld Wen Holding 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 essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NioCorp Developments and Jeld Wen

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

The idea behind NioCorp Developments Ltd and Jeld Wen Holding 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 Valuation module to check real value of public entities based on technical and fundamental data.