Correlation Between BBB Foods and John Wiley

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

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

Diversification Opportunities for BBB Foods and John Wiley

0.32

Correlation Coefficient

BBB Foods  John Wiley

Weak diversification

The 3 months correlation between BBB and John is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods 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 BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and John Wiley go up and down completely randomly.

Pair Corralation between BBB Foods and John Wiley

Given the investment horizon of 90 days BBB Foods is expected to under-perform the John Wiley. In addition to that, BBB Foods is 1.58 times more volatile than John Wiley Sons. It trades about -0.43 of its total potential returns per unit of risk. John Wiley Sons is currently generating about -0.07 per unit of volatility. If you would invest  3,990  in John Wiley Sons on December 5, 2024 and sell it today you would lose (90.00) from holding John Wiley Sons or give up 2.26% of portfolio value over 90 days.

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

BBB Foods  vs.  John Wiley Sons

BBB Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

John Wiley Sons

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BBB Foods and John Wiley

The main advantage of trading using opposite BBB Foods and John Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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 BBB Foods 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.