Correlation Between John Bean and RETAIL FOOD
Can any of the company-specific risk be diversified away by investing in both John Bean and RETAIL FOOD 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 Bean and RETAIL FOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and RETAIL FOOD GROUP, you can compare the effects of market volatilities on John Bean and RETAIL FOOD 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 Bean with a short position of RETAIL FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and RETAIL FOOD.
Diversification Opportunities for John Bean and RETAIL FOOD
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and RETAIL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP and John Bean 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 Bean Technologies are associated (or correlated) with RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of John Bean i.e., John Bean and RETAIL FOOD go up and down completely randomly.
Pair Corralation between John Bean and RETAIL FOOD
Assuming the 90 days horizon John Bean Technologies is expected to generate 0.72 times more return on investment than RETAIL FOOD. However, John Bean Technologies is 1.39 times less risky than RETAIL FOOD. It trades about 0.2 of its potential returns per unit of risk. RETAIL FOOD GROUP is currently generating about 0.01 per unit of risk. If you would invest 10,800 in John Bean Technologies on September 12, 2024 and sell it today you would earn a total of 900.00 from holding John Bean Technologies or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
John Bean Technologies vs. RETAIL FOOD GROUP
Performance |
| Timeline |
| John Bean Technologies |
| RETAIL FOOD GROUP |
John Bean and RETAIL FOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and RETAIL FOOD
The main advantage of trading using opposite John Bean and RETAIL FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, RETAIL FOOD 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 RETAIL FOOD will offset losses from the drop in RETAIL FOOD's long position.| John Bean vs. Japan Post Insurance | John Bean vs. China BlueChemical | John Bean vs. Goosehead Insurance | John Bean vs. Quaker Chemical |
| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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