Correlation Between John Wiley and Lee Enterprises

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

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

Diversification Opportunities for John Wiley and Lee Enterprises

0.14

Correlation Coefficient

John Wiley  Lee Enterprises

Average diversification

The 3 months correlation between John and Lee is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons and Lee Enterprises Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Enterprises and John Wiley 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 John Wiley Sons are associated (or correlated) with Lee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Enterprises has no effect on the direction of John Wiley i.e., John Wiley and Lee Enterprises go up and down completely randomly.

Pair Corralation between John Wiley and Lee Enterprises

Considering the 90-day investment horizon John Wiley Sons is expected to generate 0.64 times more return on investment than Lee Enterprises. However, John Wiley Sons is 1.55 times less risky than Lee Enterprises. It trades about 0.0 of its potential returns per unit of risk. Lee Enterprises Incorporated is currently generating about -0.13 per unit of risk. If you would invest  4,491  in John Wiley Sons on December 26, 2024 and sell it today you would lose (61.00) from holding John Wiley Sons or give up 1.36% of portfolio value over 90 days.

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

John Wiley Sons  vs.  Lee Enterprises Incorporated

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. In spite of fairly strong essential indicators, John Wiley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lee Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lee Enterprises Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental 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 John Wiley and Lee Enterprises

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

The idea behind John Wiley Sons and Lee Enterprises Incorporated 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.