Correlation Between Travis Perkins and Jeld Wen

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

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

Diversification Opportunities for Travis Perkins and Jeld Wen

0.94

Correlation Coefficient

Travis Perkins  Jeld Wen

Almost no diversification

The 3 months correlation between Travis and Jeld is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Travis Perkins PLC 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 Travis Perkins 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 Travis Perkins PLC 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 Travis Perkins i.e., Travis Perkins and Jeld Wen go up and down completely randomly.

Pair Corralation between Travis Perkins and Jeld Wen

Assuming the 90 days horizon Travis Perkins PLC is expected to generate 0.43 times more return on investment than Jeld Wen. However, Travis Perkins PLC is 2.3 times less risky than Jeld Wen. It trades about -0.26 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.49 per unit of risk. If you would invest  969.00  in Travis Perkins PLC on September 30, 2024 and sell it today you would lose (63.00) from holding Travis Perkins PLC or give up 6.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Travis Perkins PLC  vs.  Jeld Wen Holding

Travis Perkins PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Travis Perkins PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jeld Wen Holding

Risk-Adjusted Performance

0 of 100

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

Pair Trading with Travis Perkins and Jeld Wen

The main advantage of trading using opposite Travis Perkins and Jeld Wen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travis Perkins 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 Travis Perkins PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..