Correlation Between John Wiley and RCS MediaGroup

Can any of the company-specific risk be diversified away by investing in both John Wiley and RCS MediaGroup 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 RCS MediaGroup 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 RCS MediaGroup SpA, you can compare the effects of market volatilities on John Wiley and RCS MediaGroup 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 RCS MediaGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Wiley and RCS MediaGroup.

Diversification Opportunities for John Wiley and RCS MediaGroup

0.31

Correlation Coefficient

John Wiley  RCS MediaGroup

Weak diversification

The 3 months correlation between John and RCS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons and RCS MediaGroup SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCS MediaGroup SpA 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 RCS MediaGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCS MediaGroup SpA has no effect on the direction of John Wiley i.e., John Wiley and RCS MediaGroup go up and down completely randomly.

Pair Corralation between John Wiley and RCS MediaGroup

Considering the 90-day investment horizon John Wiley Sons is expected to generate 0.97 times more return on investment than RCS MediaGroup. However, John Wiley Sons is 1.03 times less risky than RCS MediaGroup. It trades about 0.09 of its potential returns per unit of risk. RCS MediaGroup SpA is currently generating about 0.08 per unit of risk. If you would invest  2,955  in John Wiley Sons on September 15, 2024 and sell it today you would earn a total of  1,641  from holding John Wiley Sons or generate 55.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	64.31%
Values	Daily Returns

John Wiley Sons  vs.  RCS MediaGroup SpA

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. 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.

RCS MediaGroup SpA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John Wiley and RCS MediaGroup

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

The idea behind John Wiley Sons and RCS MediaGroup SpA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.