Correlation Between Jeld Wen and US GoldMining

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

By analyzing existing cross correlation between Jeld Wen Holding and US GoldMining Common, you can compare the effects of market volatilities on Jeld Wen and US GoldMining 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 Jeld Wen with a short position of US GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and US GoldMining.

Diversification Opportunities for Jeld Wen and US GoldMining

0.31

Correlation Coefficient

Jeld Wen  US GoldMining

Weak diversification

The 3 months correlation between Jeld and USGO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and US GoldMining Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Common and Jeld Wen 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 Jeld Wen Holding are associated (or correlated) with US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Common has no effect on the direction of Jeld Wen i.e., Jeld Wen and US GoldMining go up and down completely randomly.

Pair Corralation between Jeld Wen and US GoldMining

Given the investment horizon of 90 days Jeld Wen Holding is expected to generate 0.73 times more return on investment than US GoldMining. However, Jeld Wen Holding is 1.37 times less risky than US GoldMining. It trades about -0.01 of its potential returns per unit of risk. US GoldMining Common is currently generating about -0.1 per unit of risk. If you would invest  2,042  in Jeld Wen Holding on February 2, 2024 and sell it today you would lose (44.00) from holding Jeld Wen Holding or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Jeld Wen Holding  vs.  US GoldMining Common

Jeld Wen Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jeld Wen Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Jeld Wen may actually be approaching a critical reversion point that can send shares even higher in June 2024.

US GoldMining Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US GoldMining Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, US GoldMining is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Jeld Wen and US GoldMining

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

The idea behind Jeld Wen Holding and US GoldMining Common 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.