Correlation Between Steel Connect and John Wiley

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

By analyzing existing cross correlation between Steel Connect and John Wiley Sons, you can compare the effects of market volatilities on Steel Connect and John Wiley 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 Steel Connect with a short position of John Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Connect and John Wiley.

Diversification Opportunities for Steel Connect and John Wiley

-0.87

Correlation Coefficient

Steel Connect  John Wiley

Pay attention - limited upside

The 3 months correlation between Steel and John is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Steel Connect and John Wiley Sons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wiley Sons and Steel Connect 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 Steel Connect are associated (or correlated) with John Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wiley Sons has no effect on the direction of Steel Connect i.e., Steel Connect and John Wiley go up and down completely randomly.

Pair Corralation between Steel Connect and John Wiley

Given the investment horizon of 90 days Steel Connect is expected to generate 131.75 times less return on investment than John Wiley. But when comparing it to its historical volatility, Steel Connect is 25.03 times less risky than John Wiley. It trades about 0.01 of its potential returns per unit of risk. John Wiley Sons is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,846  in John Wiley Sons on October 21, 2024 and sell it today you would earn a total of  524.00  from holding John Wiley Sons or generate 13.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	82.12%
Values	Daily Returns

Steel Connect  vs.  John Wiley Sons

Steel Connect

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Steel Connect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain fundamental indicators, Steel Connect displayed solid returns over the last few months and may actually be approaching a breakup point.

John Wiley Sons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Wiley Sons has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Steel Connect and John Wiley

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

The idea behind Steel Connect and John Wiley Sons 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.