Correlation Between John Wiley and Bridgetown Holdings

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

Diversification Opportunities for John Wiley and Bridgetown Holdings

0.47

Correlation Coefficient

John Wiley  Bridgetown Holdings

Very weak diversification

The 3 months correlation between John and Bridgetown is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons and Bridgetown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgetown Holdings 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 Bridgetown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgetown Holdings has no effect on the direction of John Wiley i.e., John Wiley and Bridgetown Holdings go up and down completely randomly.

Pair Corralation between John Wiley and Bridgetown Holdings

Given the investment horizon of 90 days John Wiley Sons is expected to generate 6.35 times more return on investment than Bridgetown Holdings. However, John Wiley is 6.35 times more volatile than Bridgetown Holdings. It trades about 0.08 of its potential returns per unit of risk. Bridgetown Holdings is currently generating about 0.07 per unit of risk. If you would invest  3,935  in John Wiley Sons on September 30, 2024 and sell it today you would earn a total of  471.00  from holding John Wiley Sons or generate 11.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	33.92%
Values	Daily Returns

John Wiley Sons  vs.  Bridgetown Holdings

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. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bridgetown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgetown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bridgetown Holdings is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with John Wiley and Bridgetown Holdings

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

The idea behind John Wiley Sons and Bridgetown Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.