Correlation Between John B and Swiss Water
Can any of the company-specific risk be diversified away by investing in both John B and Swiss Water 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 Swiss Water 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 Swiss Water Decaffeinated, you can compare the effects of market volatilities on John B and Swiss Water 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 Swiss Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Swiss Water.
Diversification Opportunities for John B and Swiss Water
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and Swiss is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Swiss Water Decaffeinated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Water Decaffeinated 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 Swiss Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Water Decaffeinated has no effect on the direction of John B i.e., John B and Swiss Water go up and down completely randomly.
Pair Corralation between John B and Swiss Water
Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Swiss Water. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 1.31 times less risky than Swiss Water. The stock trades about -0.01 of its potential returns per unit of risk. The Swiss Water Decaffeinated is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 199.00 in Swiss Water Decaffeinated on August 25, 2024 and sell it today you would earn a total of 61.00 from holding Swiss Water Decaffeinated or generate 30.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John B Sanfilippo vs. Swiss Water Decaffeinated
Performance |
| Timeline |
| John B Sanfilippo |
| Swiss Water Decaffeinated |
John B and Swiss Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Swiss Water
The main advantage of trading using opposite John B and Swiss Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Swiss Water 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 Swiss Water will offset losses from the drop in Swiss Water's long position.| John B vs. Bellring Brands LLC | John B vs. Ingredion Incorporated | John B vs. Nomad Foods | John B vs. Post Holdings |
| Swiss Water vs. Seneca Foods Corp | Swiss Water vs. Lifeway Foods | Swiss Water vs. John B Sanfilippo | Swiss Water vs. Real Good Food |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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