Correlation Between John Wiley and CTS

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

Diversification Opportunities for John Wiley and CTS

0.47

Correlation Coefficient

John Wiley  CTS

Very weak diversification

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

Pair Corralation between John Wiley and CTS

Given the investment horizon of 90 days John Wiley Sons is expected to under-perform the CTS. But the stock apears to be less risky and, when comparing its historical volatility, John Wiley Sons is 1.2 times less risky than CTS. The stock trades about -0.18 of its potential returns per unit of risk. The CTS Corporation is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,845  in CTS Corporation on October 14, 2024 and sell it today you would earn a total of  145.00  from holding CTS Corporation or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.58%
Values	Daily Returns

John Wiley Sons  vs.  CTS Corp.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CTS Corporation

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with John Wiley and CTS

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

The idea behind John Wiley Sons and CTS Corporation 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.