Correlation Between Danone SA and J+J SNACK
Can any of the company-specific risk be diversified away by investing in both Danone SA and J+J SNACK 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 Danone SA and J+J SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and JJ SNACK FOODS, you can compare the effects of market volatilities on Danone SA and J+J SNACK 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 Danone SA with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and J+J SNACK.
Diversification Opportunities for Danone SA and J+J SNACK
Good diversification
The 3 months correlation between Danone and J+J is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS and Danone SA 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 Danone SA are associated (or correlated) with J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Danone SA i.e., Danone SA and J+J SNACK go up and down completely randomly.
Pair Corralation between Danone SA and J+J SNACK
Assuming the 90 days horizon Danone SA is expected to under-perform the J+J SNACK. But the stock apears to be less risky and, when comparing its historical volatility, Danone SA is 1.58 times less risky than J+J SNACK. The stock trades about -0.07 of its potential returns per unit of risk. The JJ SNACK FOODS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 15,400 in JJ SNACK FOODS on August 31, 2024 and sell it today you would earn a total of 900.00 from holding JJ SNACK FOODS or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. JJ SNACK FOODS
Performance |
| Timeline |
| Danone SA |
| JJ SNACK FOODS |
Danone SA and J+J SNACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and J+J SNACK
The main advantage of trading using opposite Danone SA and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, J+J SNACK 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 J+J SNACK will offset losses from the drop in J+J SNACK's long position.| Danone SA vs. SBA Communications Corp | Danone SA vs. Spirent Communications plc | Danone SA vs. SCANDMEDICAL SOLDK 040 | Danone SA vs. T Mobile |
| J+J SNACK vs. Danone SA | J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. NMI Holdings | J+J SNACK vs. Origin Agritech |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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