Correlation Between Papa Johns and WestRock

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

By analyzing existing cross correlation between Papa Johns International and WestRock Co, you can compare the effects of market volatilities on Papa Johns and WestRock 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 Papa Johns with a short position of WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Papa Johns and WestRock.

Diversification Opportunities for Papa Johns and WestRock

-0.86

Correlation Coefficient

Papa Johns  WestRock

Pay attention - limited upside

The 3 months correlation between Papa and WestRock is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Papa Johns International and WestRock Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WestRock and Papa Johns 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 Papa Johns International are associated (or correlated) with WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WestRock has no effect on the direction of Papa Johns i.e., Papa Johns and WestRock go up and down completely randomly.

Pair Corralation between Papa Johns and WestRock

Given the investment horizon of 90 days Papa Johns International is expected to under-perform the WestRock. In addition to that, Papa Johns is 1.33 times more volatile than WestRock Co. It trades about -0.32 of its total potential returns per unit of risk. WestRock Co is currently generating about 0.23 per unit of volatility. If you would invest  4,477  in WestRock Co on February 28, 2024 and sell it today you would earn a total of  936.00  from holding WestRock Co or generate 20.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Papa Johns International  vs.  WestRock Co

Papa Johns International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Papa Johns International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

WestRock

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WestRock Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, WestRock disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Papa Johns and WestRock

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

The idea behind Papa Johns International and WestRock Co 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.