Correlation Between John B and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both John B and Coffee Holding 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 Coffee Holding 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 Coffee Holding Co, you can compare the effects of market volatilities on John B and Coffee Holding 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 Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Coffee Holding.
Diversification Opportunities for John B and Coffee Holding
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between John and Coffee is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding 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 Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of John B i.e., John B and Coffee Holding go up and down completely randomly.
Pair Corralation between John B and Coffee Holding
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Coffee Holding. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 1.44 times less risky than Coffee Holding. The stock trades about -0.28 of its potential returns per unit of risk. The Coffee Holding Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 362.00 in Coffee Holding Co on November 3, 2024 and sell it today you would earn a total of 33.00 from holding Coffee Holding Co or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John B Sanfilippo vs. Coffee Holding Co
Performance |
| Timeline |
| John B Sanfilippo |
| Coffee Holding |
John B and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Coffee Holding
The main advantage of trading using opposite John B and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding'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 |
| Coffee Holding vs. Seneca Foods Corp | Coffee Holding vs. J J Snack | Coffee Holding vs. Aryzta AG PK | Coffee Holding vs. Lifeway Foods |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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