Correlation Between Wolters Kluwer and Ijj

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

By analyzing existing cross correlation between Wolters Kluwer NV and Ijj Corporation, you can compare the effects of market volatilities on Wolters Kluwer and Ijj 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 Wolters Kluwer with a short position of Ijj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolters Kluwer and Ijj.

Diversification Opportunities for Wolters Kluwer and Ijj

0.01

Correlation Coefficient

Wolters Kluwer  Ijj

Significant diversification

The 3 months correlation between Wolters and Ijj is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wolters Kluwer NV and Ijj Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ijj Corporation and Wolters Kluwer 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 Wolters Kluwer NV are associated (or correlated) with Ijj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ijj Corporation has no effect on the direction of Wolters Kluwer i.e., Wolters Kluwer and Ijj go up and down completely randomly.

Pair Corralation between Wolters Kluwer and Ijj

Assuming the 90 days horizon Wolters Kluwer is expected to generate 18.67 times less return on investment than Ijj. But when comparing it to its historical volatility, Wolters Kluwer NV is 13.15 times less risky than Ijj. It trades about 0.02 of its potential returns per unit of risk. Ijj Corporation is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Ijj Corporation on September 23, 2024 and sell it today you would lose (0.05) from holding Ijj Corporation or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Wolters Kluwer NV  vs.  Ijj Corp.

Wolters Kluwer NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wolters Kluwer is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ijj Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ijj Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, Ijj is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wolters Kluwer and Ijj

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

The idea behind Wolters Kluwer NV and Ijj 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.