Correlation Between J+J SNACK and Metro AG
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on J+J SNACK and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and Metro AG.
Diversification Opportunities for J+J SNACK and Metro AG
Good diversification
The 3 months correlation between J+J and Metro is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of J+J SNACK i.e., J+J SNACK and Metro AG go up and down completely randomly.
Pair Corralation between J+J SNACK and Metro AG
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.3 times more return on investment than Metro AG. However, JJ SNACK FOODS is 3.38 times less risky than Metro AG. It trades about 0.13 of its potential returns per unit of risk. Metro AG is currently generating about 0.0 per unit of risk. If you would invest 15,093 in JJ SNACK FOODS on September 20, 2024 and sell it today you would earn a total of 1,107 from holding JJ SNACK FOODS or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJ SNACK FOODS vs. Metro AG
Performance |
| Timeline |
| JJ SNACK FOODS |
| Metro AG |
J+J SNACK and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and Metro AG
The main advantage of trading using opposite J+J SNACK and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. SIVERS SEMICONDUCTORS AB | J+J SNACK vs. NorAm Drilling AS | J+J SNACK vs. Norsk Hydro ASA |
| Metro AG vs. Superior Plus Corp | Metro AG vs. SIVERS SEMICONDUCTORS AB | Metro AG vs. NorAm Drilling AS | Metro AG vs. BANK HANDLOWY |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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