Correlation Between JC Penney and Spectrum Brands

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Can any of the company-specific risk be diversified away by investing in both JC Penney and Spectrum Brands 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 JC Penney and Spectrum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J C Penney and Spectrum Brands Holdings, you can compare the effects of market volatilities on JC Penney and Spectrum Brands 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 JC Penney with a short position of Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of JC Penney and Spectrum Brands.

Diversification Opportunities for JC Penney and Spectrum Brands

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between JCP and Spectrum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding J C Penney and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings and JC Penney 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 J C Penney are associated (or correlated) with Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of JC Penney i.e., JC Penney and Spectrum Brands go up and down completely randomly.

Pair Corralation between JC Penney and Spectrum Brands

If you would invest  8,048  in Spectrum Brands Holdings on December 29, 2023 and sell it today you would earn a total of  843.00  from holding Spectrum Brands Holdings or generate 10.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

J C Penney  vs.  Spectrum Brands Holdings

 Performance 
       Timeline  
J C Penney 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days J C Penney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, JC Penney is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Spectrum Brands Holdings 

Risk-Adjusted Performance

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Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Brands Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Spectrum Brands may actually be approaching a critical reversion point that can send shares even higher in April 2024.

JC Penney and Spectrum Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JC Penney and Spectrum Brands

The main advantage of trading using opposite JC Penney and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JC Penney position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.
The idea behind J C Penney and Spectrum Brands 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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