Correlation Between J+J SNACK and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and Ebro Foods 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 Ebro Foods 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 Ebro Foods SA, you can compare the effects of market volatilities on J+J SNACK and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and Ebro Foods.
Diversification Opportunities for J+J SNACK and Ebro Foods
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between J+J and Ebro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods SA has no effect on the direction of J+J SNACK i.e., J+J SNACK and Ebro Foods go up and down completely randomly.
Pair Corralation between J+J SNACK and Ebro Foods
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 1.41 times more return on investment than Ebro Foods. However, J+J SNACK is 1.41 times more volatile than Ebro Foods SA. It trades about 0.03 of its potential returns per unit of risk. Ebro Foods SA is currently generating about 0.01 per unit of risk. If you would invest 14,075 in JJ SNACK FOODS on September 4, 2024 and sell it today you would earn a total of 2,225 from holding JJ SNACK FOODS or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
JJ SNACK FOODS vs. Ebro Foods SA
Performance |
| Timeline |
| JJ SNACK FOODS |
| Ebro Foods SA |
J+J SNACK and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and Ebro Foods
The main advantage of trading using opposite J+J SNACK and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| J+J SNACK vs. Nestl SA | J+J SNACK vs. Kraft Heinz Co | J+J SNACK vs. General Mills | J+J SNACK vs. Kellogg Company |
| Ebro Foods vs. Nestl SA | Ebro Foods vs. Kraft Heinz Co | Ebro Foods vs. General Mills | Ebro Foods vs. Kellogg Company |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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