Correlation Between Interface and Jeld Wen

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

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

Diversification Opportunities for Interface and Jeld Wen

0.9

Correlation Coefficient

Interface  Jeld Wen

Almost no diversification

The 3 months correlation between Interface and Jeld is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Interface 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 Interface 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 Interface 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 Interface i.e., Interface and Jeld Wen go up and down completely randomly.

Pair Corralation between Interface and Jeld Wen

Given the investment horizon of 90 days Interface is expected to under-perform the Jeld Wen. But the stock apears to be less risky and, when comparing its historical volatility, Interface is 1.81 times less risky than Jeld Wen. The stock trades about -0.13 of its potential returns per unit of risk. The Jeld Wen Holding is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  806.00  in Jeld Wen Holding on December 29, 2024 and sell it today you would lose (179.00) from holding Jeld Wen Holding or give up 22.21% of portfolio value over 90 days.

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

Interface  vs.  Jeld Wen Holding

Interface

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interface 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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Interface and Jeld Wen

The main advantage of trading using opposite Interface and Jeld Wen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interface 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 Interface 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.