Correlation Between John B and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both John B and Hormel Foods 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 Hormel Foods 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 Hormel Foods, you can compare the effects of market volatilities on John B and Hormel Foods 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 Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Hormel Foods.
Diversification Opportunities for John B and Hormel Foods
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Hormel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods 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 Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of John B i.e., John B and Hormel Foods go up and down completely randomly.
Pair Corralation between John B and Hormel Foods
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Hormel Foods. In addition to that, John B is 2.29 times more volatile than Hormel Foods. It trades about -0.16 of its total potential returns per unit of risk. Hormel Foods is currently generating about -0.05 per unit of volatility. If you would invest 3,109 in Hormel Foods on August 25, 2024 and sell it today you would lose (42.00) from holding Hormel Foods or give up 1.35% 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. Hormel Foods
Performance |
| Timeline |
| John B Sanfilippo |
| Hormel Foods |
John B and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Hormel Foods
The main advantage of trading using opposite John B and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Hormel Foods 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| John B vs. Bellring Brands LLC | John B vs. Ingredion Incorporated | John B vs. JM Smucker | John B vs. Nomad Foods |
| Hormel Foods vs. Bellring Brands LLC | Hormel Foods vs. Ingredion Incorporated | Hormel Foods vs. JM Smucker | Hormel Foods vs. John B Sanfilippo |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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