Correlation Between J J and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both J J and Coffee Holding 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 Coffee Holding 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 Coffee Holding Co, you can compare the effects of market volatilities on J J and Coffee Holding 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 Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and Coffee Holding.
Diversification Opportunities for J J and Coffee Holding
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between JJSF and Coffee is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding 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 Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of J J i.e., J J and Coffee Holding go up and down completely randomly.
Pair Corralation between J J and Coffee Holding
Given the investment horizon of 90 days J J is expected to generate 6.67 times less return on investment than Coffee Holding. But when comparing it to its historical volatility, J J Snack is 2.9 times less risky than Coffee Holding. It trades about 0.02 of its potential returns per unit of risk. Coffee Holding Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 225.00 in Coffee Holding Co on August 24, 2024 and sell it today you would earn a total of 138.00 from holding Coffee Holding Co or generate 61.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J J Snack vs. Coffee Holding Co
Performance |
| Timeline |
| J J Snack |
| Coffee Holding |
J J and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J J and Coffee Holding
The main advantage of trading using opposite J J and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J J position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding's long position.The idea behind J J Snack and Coffee Holding Co 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.| Coffee Holding vs. Seneca Foods Corp | Coffee Holding vs. Natures Sunshine Products | Coffee Holding vs. J J Snack | Coffee Holding vs. John B Sanfilippo |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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