Correlation Between Johnson Outdoors and Xponential Fitness

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

Diversification Opportunities for Johnson Outdoors and Xponential Fitness

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Johnson and Xponential is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Outdoors and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Johnson Outdoors 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 Johnson Outdoors are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Johnson Outdoors i.e., Johnson Outdoors and Xponential Fitness go up and down completely randomly.

Pair Corralation between Johnson Outdoors and Xponential Fitness

Given the investment horizon of 90 days Johnson Outdoors is expected to generate 0.8 times more return on investment than Xponential Fitness. However, Johnson Outdoors is 1.25 times less risky than Xponential Fitness. It trades about 0.2 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.16 per unit of risk. If you would invest  3,362  in Johnson Outdoors on April 22, 2024 and sell it today you would earn a total of  367.00  from holding Johnson Outdoors or generate 10.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Johnson Outdoors  vs.  Xponential Fitness

 Performance 
       Timeline  
Johnson Outdoors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Johnson Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Xponential Fitness 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Johnson Outdoors and Xponential Fitness Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Johnson Outdoors and Xponential Fitness

The main advantage of trading using opposite Johnson Outdoors and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Outdoors position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.
The idea behind Johnson Outdoors and Xponential Fitness 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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