Correlation Between John B and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both John B and Ingredion Incorporated 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 Ingredion Incorporated 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 Ingredion Incorporated, you can compare the effects of market volatilities on John B and Ingredion Incorporated 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 Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Ingredion Incorporated.
Diversification Opportunities for John B and Ingredion Incorporated
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between John and Ingredion is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated 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 Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of John B i.e., John B and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between John B and Ingredion Incorporated
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Ingredion Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 1.37 times less risky than Ingredion Incorporated. The stock trades about -0.13 of its potential returns per unit of risk. The Ingredion Incorporated is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 13,484 in Ingredion Incorporated on August 28, 2024 and sell it today you would earn a total of 1,344 from holding Ingredion Incorporated or generate 9.97% 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. Ingredion Incorporated
Performance |
| Timeline |
| John B Sanfilippo |
| Ingredion Incorporated |
John B and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Ingredion Incorporated
The main advantage of trading using opposite John B and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Ingredion Incorporated 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 Ingredion Incorporated will offset losses from the drop in Ingredion Incorporated'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 |
| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
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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