Correlation Between J+J SNACK and Lightbridge
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and Lightbridge 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 Lightbridge 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 Lightbridge, you can compare the effects of market volatilities on J+J SNACK and Lightbridge 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 Lightbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and Lightbridge.
Diversification Opportunities for J+J SNACK and Lightbridge
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between J+J and Lightbridge is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and Lightbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightbridge 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 Lightbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightbridge has no effect on the direction of J+J SNACK i.e., J+J SNACK and Lightbridge go up and down completely randomly.
Pair Corralation between J+J SNACK and Lightbridge
Assuming the 90 days trading horizon J+J SNACK is expected to generate 19.63 times less return on investment than Lightbridge. But when comparing it to its historical volatility, JJ SNACK FOODS is 7.3 times less risky than Lightbridge. It trades about 0.01 of its potential returns per unit of risk. Lightbridge is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 450.00 in Lightbridge on August 24, 2024 and sell it today you would earn a total of 152.00 from holding Lightbridge or generate 33.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.41% |
| Values | Daily Returns |
JJ SNACK FOODS vs. Lightbridge
Performance |
| Timeline |
| JJ SNACK FOODS |
| Lightbridge |
J+J SNACK and Lightbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and Lightbridge
The main advantage of trading using opposite J+J SNACK and Lightbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, Lightbridge 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 Lightbridge will offset losses from the drop in Lightbridge's long position.| J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. NMI Holdings | J+J SNACK vs. Origin Agritech | J+J SNACK vs. SIVERS SEMICONDUCTORS AB |
| Lightbridge vs. JJ SNACK FOODS | Lightbridge vs. Diamondrock Hospitality Co | Lightbridge vs. Austevoll Seafood ASA | Lightbridge vs. Ramsay Health Care |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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