Correlation Between J+J SNACK and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and PREMIER 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 PREMIER 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 PREMIER FOODS, you can compare the effects of market volatilities on J+J SNACK and PREMIER 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 PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and PREMIER FOODS.
Diversification Opportunities for J+J SNACK and PREMIER FOODS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between J+J and PREMIER is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of J+J SNACK i.e., J+J SNACK and PREMIER FOODS go up and down completely randomly.
Pair Corralation between J+J SNACK and PREMIER FOODS
Assuming the 90 days trading horizon J+J SNACK is expected to generate 1.29 times less return on investment than PREMIER FOODS. In addition to that, J+J SNACK is 1.27 times more volatile than PREMIER FOODS. It trades about 0.09 of its total potential returns per unit of risk. PREMIER FOODS is currently generating about 0.15 per unit of volatility. If you would invest 170.00 in PREMIER FOODS on September 3, 2024 and sell it today you would earn a total of 66.00 from holding PREMIER FOODS or generate 38.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJ SNACK FOODS vs. PREMIER FOODS
Performance |
| Timeline |
| JJ SNACK FOODS |
| PREMIER FOODS |
J+J SNACK and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and PREMIER FOODS
The main advantage of trading using opposite J+J SNACK and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, PREMIER 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.| J+J SNACK vs. GOLD ROAD RES | J+J SNACK vs. CosmoSteel Holdings Limited | J+J SNACK vs. Caltagirone SpA | J+J SNACK vs. TEXAS ROADHOUSE |
| PREMIER FOODS vs. USU Software AG | PREMIER FOODS vs. Mitsubishi Materials | PREMIER FOODS vs. Martin Marietta Materials | PREMIER FOODS vs. Check Point Software |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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