Correlation Between J+J SNACK and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and Iridium Communications 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 J+J SNACK and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJ SNACK FOODS and Iridium Communications, you can compare the effects of market volatilities on J+J SNACK and Iridium Communications 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 J+J SNACK with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and Iridium Communications.
Diversification Opportunities for J+J SNACK and Iridium Communications
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between J+J and Iridium is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of J+J SNACK i.e., J+J SNACK and Iridium Communications go up and down completely randomly.
Pair Corralation between J+J SNACK and Iridium Communications
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to under-perform the Iridium Communications. But the stock apears to be less risky and, when comparing its historical volatility, JJ SNACK FOODS is 1.68 times less risky than Iridium Communications. The stock trades about -0.6 of its potential returns per unit of risk. The Iridium Communications is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 2,801 in Iridium Communications on October 20, 2024 and sell it today you would lose (137.00) from holding Iridium Communications or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
JJ SNACK FOODS vs. Iridium Communications
Performance |
| Timeline |
| JJ SNACK FOODS |
| Iridium Communications |
J+J SNACK and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and Iridium Communications
The main advantage of trading using opposite J+J SNACK and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| J+J SNACK vs. SLR Investment Corp | J+J SNACK vs. Keck Seng Investments | J+J SNACK vs. AGNC INVESTMENT | J+J SNACK vs. Daito Trust Construction |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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