Correlation Between NEXT Plc and JJill

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

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

Diversification Opportunities for NEXT Plc and JJill

0.7

Correlation Coefficient

NEXT Plc  JJill

Poor diversification

The 3 months correlation between NEXT and JJill is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NEXT plc and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc and NEXT Plc 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 NEXT plc are associated (or correlated) with JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of NEXT Plc i.e., NEXT Plc and JJill go up and down completely randomly.

Pair Corralation between NEXT Plc and JJill

Assuming the 90 days horizon NEXT plc is expected to generate 0.83 times more return on investment than JJill. However, NEXT plc is 1.21 times less risky than JJill. It trades about 0.07 of its potential returns per unit of risk. JJill Inc is currently generating about 0.01 per unit of risk. If you would invest  8,392  in NEXT plc on September 28, 2024 and sell it today you would earn a total of  3,949  from holding NEXT plc or generate 47.06% return on investment over 90 days.

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

NEXT plc  vs.  JJill Inc

NEXT plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NEXT plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NEXT Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JJill Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NEXT Plc and JJill

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

The idea behind NEXT plc and JJill Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.