Correlation Between John Wiley and Brandywine Realty

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

Diversification Opportunities for John Wiley and Brandywine Realty

0.2

Correlation Coefficient

John Wiley  Brandywine Realty

Modest diversification

The 3 months correlation between John and Brandywine is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons and Brandywine Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandywine Realty Trust 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 Brandywine Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandywine Realty Trust has no effect on the direction of John Wiley i.e., John Wiley and Brandywine Realty go up and down completely randomly.

Pair Corralation between John Wiley and Brandywine Realty

Given the investment horizon of 90 days John Wiley Sons is expected to generate 53.51 times more return on investment than Brandywine Realty. However, John Wiley is 53.51 times more volatile than Brandywine Realty Trust. It trades about 0.11 of its potential returns per unit of risk. Brandywine Realty Trust is currently generating about 0.05 per unit of risk. If you would invest  3,162  in John Wiley Sons on September 15, 2024 and sell it today you would earn a total of  1,514  from holding John Wiley Sons or generate 47.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.02%
Values	Daily Returns

John Wiley Sons  vs.  Brandywine Realty Trust

John Wiley Sons

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Wiley Sons are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, John Wiley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Brandywine Realty Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Brandywine Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with John Wiley and Brandywine Realty

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

The idea behind John Wiley Sons and Brandywine Realty Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.