Correlation Between John B and Freshpet
Can any of the company-specific risk be diversified away by investing in both John B and Freshpet 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 Freshpet 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 Freshpet, you can compare the effects of market volatilities on John B and Freshpet 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 Freshpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Freshpet.
Diversification Opportunities for John B and Freshpet
Pay attention - limited upside
The 3 months correlation between John and Freshpet is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet 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 Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of John B i.e., John B and Freshpet go up and down completely randomly.
Pair Corralation between John B and Freshpet
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Freshpet. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 1.12 times less risky than Freshpet. The stock trades about -0.13 of its potential returns per unit of risk. The Freshpet is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 13,468 in Freshpet on August 28, 2024 and sell it today you would earn a total of 2,000 from holding Freshpet or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John B Sanfilippo vs. Freshpet
Performance |
| Timeline |
| John B Sanfilippo |
| Freshpet |
John B and Freshpet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Freshpet
The main advantage of trading using opposite John B and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Freshpet 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 Freshpet will offset losses from the drop in Freshpet's long position.| John B vs. Bellring Brands LLC | John B vs. Ingredion Incorporated | John B vs. Nomad Foods | John B vs. Simply Good Foods |
| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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