Correlation Between J+J SNACK and CVS Health
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and CVS Health 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 CVS Health 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 CVS Health, you can compare the effects of market volatilities on J+J SNACK and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and CVS Health.
Diversification Opportunities for J+J SNACK and CVS Health
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between J+J and CVS is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of J+J SNACK i.e., J+J SNACK and CVS Health go up and down completely randomly.
Pair Corralation between J+J SNACK and CVS Health
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.63 times more return on investment than CVS Health. However, JJ SNACK FOODS is 1.59 times less risky than CVS Health. It trades about 0.03 of its potential returns per unit of risk. CVS Health is currently generating about 0.0 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. CVS Health
Performance |
| Timeline |
| JJ SNACK FOODS |
| CVS Health |
J+J SNACK and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and CVS Health
The main advantage of trading using opposite J+J SNACK and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's 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 |
| CVS Health vs. TOTAL GABON | CVS Health vs. Walgreens Boots Alliance | CVS Health vs. Peak Resources Limited |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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