Correlation Between John B and Calbee
Can any of the company-specific risk be diversified away by investing in both John B and Calbee 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 Calbee 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 Calbee Inc, you can compare the effects of market volatilities on John B and Calbee 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 Calbee. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Calbee.
Diversification Opportunities for John B and Calbee
Poor diversification
The 3 months correlation between John and Calbee is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc 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 Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of John B i.e., John B and Calbee go up and down completely randomly.
Pair Corralation between John B and Calbee
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Calbee. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 2.37 times less risky than Calbee. The stock trades about -0.03 of its potential returns per unit of risk. The Calbee Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 546.00 in Calbee Inc on September 1, 2024 and sell it today you would lose (45.00) from holding Calbee Inc or give up 8.24% 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. Calbee Inc
Performance |
| Timeline |
| John B Sanfilippo |
| Calbee Inc |
John B and Calbee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Calbee
The main advantage of trading using opposite John B and Calbee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Calbee 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 Calbee will offset losses from the drop in Calbee'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 |
| Calbee vs. The A2 Milk | Calbee vs. Altavoz Entertainment | Calbee vs. Artisan Consumer Goods | Calbee vs. General Mills |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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