Correlation Between J J and Campbell Soup
Can any of the company-specific risk be diversified away by investing in both J J and Campbell Soup 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 and Campbell Soup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J J Snack and Campbell Soup, you can compare the effects of market volatilities on J J and Campbell Soup 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 with a short position of Campbell Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and Campbell Soup.
Diversification Opportunities for J J and Campbell Soup
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JJSF and Campbell is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup and J J 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 J J Snack are associated (or correlated) with Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of J J i.e., J J and Campbell Soup go up and down completely randomly.
Pair Corralation between J J and Campbell Soup
Given the investment horizon of 90 days J J Snack is expected to under-perform the Campbell Soup. But the stock apears to be less risky and, when comparing its historical volatility, J J Snack is 1.01 times less risky than Campbell Soup. The stock trades about -0.18 of its potential returns per unit of risk. The Campbell Soup is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 4,633 in Campbell Soup on November 1, 2024 and sell it today you would lose (671.00) from holding Campbell Soup or give up 14.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
J J Snack vs. Campbell Soup
Performance |
| Timeline |
| J J Snack |
| Campbell Soup |
J J and Campbell Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J J and Campbell Soup
The main advantage of trading using opposite J J and Campbell Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J J position performs unexpectedly, Campbell Soup 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 Campbell Soup will offset losses from the drop in Campbell Soup's long position.The idea behind J J Snack and Campbell Soup pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Campbell Soup vs. General Mills | Campbell Soup vs. Hormel Foods | Campbell Soup vs. Kellanova | Campbell Soup vs. Lamb Weston Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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