Correlation Between JC Penney and Alphabet

Can any of the company-specific risk be diversified away by investing in both JC Penney and Alphabet 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 Alphabet 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 Alphabet Inc Class C, you can compare the effects of market volatilities on JC Penney and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of JC Penney and Alphabet.

Diversification Opportunities for JC Penney and Alphabet

0.0

Correlation Coefficient

JC Penney  Alphabet

Pay attention - limited upside

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

Pair Corralation between JC Penney and Alphabet

If you would invest  15,194  in Alphabet Inc Class C on February 4, 2024 and sell it today you would earn a total of  1,705  from holding Alphabet Inc Class C or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

J C Penney  vs.  Alphabet Inc Class C

J C Penney

Risk-Adjusted Performance

0 of 100

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.

Alphabet Class C

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JC Penney and Alphabet

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

The idea behind J C Penney and Alphabet Inc Class C 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.