Correlation Between John B and A2 Milk
Can any of the company-specific risk be diversified away by investing in both John B and A2 Milk 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 John B and A2 Milk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John B Sanfilippo and The A2 Milk, you can compare the effects of market volatilities on John B and A2 Milk 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 John B with a short position of A2 Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and A2 Milk.
Diversification Opportunities for John B and A2 Milk
Poor diversification
The 3 months correlation between John and ACOPY is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and The A2 Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2 Milk and John B 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 John B Sanfilippo are associated (or correlated) with A2 Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2 Milk has no effect on the direction of John B i.e., John B and A2 Milk go up and down completely randomly.
Pair Corralation between John B and A2 Milk
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the A2 Milk. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 2.31 times less risky than A2 Milk. The stock trades about -0.07 of its potential returns per unit of risk. The The A2 Milk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 378.00 in The A2 Milk on September 3, 2024 and sell it today you would lose (3.00) from holding The A2 Milk or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John B Sanfilippo vs. The A2 Milk
Performance |
| Timeline |
| John B Sanfilippo |
| A2 Milk |
John B and A2 Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and A2 Milk
The main advantage of trading using opposite John B and A2 Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, A2 Milk 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 A2 Milk will offset losses from the drop in A2 Milk's long position.| John B vs. Lancaster Colony | John B vs. Treehouse Foods | John B vs. Seneca Foods Corp | John B vs. Seneca Foods Corp |
| A2 Milk vs. Avi Ltd ADR | A2 Milk vs. Altavoz Entertainment | A2 Milk vs. The a2 Milk | A2 Milk vs. Aryzta AG PK |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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