Correlation Between John B and Central Garden
Can any of the company-specific risk be diversified away by investing in both John B and Central Garden 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 Central Garden 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 Central Garden Pet, you can compare the effects of market volatilities on John B and Central Garden 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 Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Central Garden.
Diversification Opportunities for John B and Central Garden
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between John and Central is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet 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 Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of John B i.e., John B and Central Garden go up and down completely randomly.
Pair Corralation between John B and Central Garden
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Central Garden. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 1.12 times less risky than Central Garden. The stock trades about -0.01 of its potential returns per unit of risk. The Central Garden Pet is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,283 in Central Garden Pet on November 2, 2024 and sell it today you would lose (174.00) from holding Central Garden Pet or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
John B Sanfilippo vs. Central Garden Pet
Performance |
| Timeline |
| John B Sanfilippo |
| Central Garden Pet |
John B and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Central Garden
The main advantage of trading using opposite John B and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.| John B vs. Lancaster Colony | John B vs. Treehouse Foods | John B vs. Seneca Foods Corp | John B vs. J J Snack |
| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. Central Garden Pet |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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