Correlation Between John B and Village Farms
Can any of the company-specific risk be diversified away by investing in both John B and Village Farms 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 Village Farms 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 Village Farms International, you can compare the effects of market volatilities on John B and Village Farms 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 Village Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Village Farms.
Diversification Opportunities for John B and Village Farms
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Village is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Village Farms International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Farms Intern 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 Village Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Farms Intern has no effect on the direction of John B i.e., John B and Village Farms go up and down completely randomly.
Pair Corralation between John B and Village Farms
Given the investment horizon of 90 days John B Sanfilippo is expected to generate 0.6 times more return on investment than Village Farms. However, John B Sanfilippo is 1.67 times less risky than Village Farms. It trades about -0.13 of its potential returns per unit of risk. Village Farms International is currently generating about -0.09 per unit of risk. If you would invest 9,499 in John B Sanfilippo on August 28, 2024 and sell it today you would lose (1,108) from holding John B Sanfilippo or give up 11.66% 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. Village Farms International
Performance |
| Timeline |
| John B Sanfilippo |
| Village Farms Intern |
John B and Village Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John B and Village Farms
The main advantage of trading using opposite John B and Village Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John B position performs unexpectedly, Village Farms 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 Village Farms will offset losses from the drop in Village Farms' long position.| John B vs. Bellring Brands LLC | John B vs. Ingredion Incorporated | John B vs. Nomad Foods | John B vs. Simply Good Foods |
| Village Farms vs. Lancaster Colony | Village Farms vs. Treehouse Foods | Village Farms vs. John B Sanfilippo | Village Farms 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 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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