Correlation Between J J and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both J J and Nomad 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 and Nomad Foods 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 Nomad Foods, you can compare the effects of market volatilities on J J and Nomad 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 with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and Nomad Foods.
Diversification Opportunities for J J and Nomad Foods
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between JJSF and Nomad is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods 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 Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of J J i.e., J J and Nomad Foods go up and down completely randomly.
Pair Corralation between J J and Nomad Foods
Given the investment horizon of 90 days J J Snack is expected to generate 1.2 times more return on investment than Nomad Foods. However, J J is 1.2 times more volatile than Nomad Foods. It trades about 0.11 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.05 per unit of risk. If you would invest 16,547 in J J Snack on August 28, 2024 and sell it today you would earn a total of 718.00 from holding J J Snack or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J J Snack vs. Nomad Foods
Performance |
| Timeline |
| J J Snack |
| Nomad Foods |
J J and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J J and Nomad Foods
The main advantage of trading using opposite J J and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J J position performs unexpectedly, Nomad 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.The idea behind J J Snack and Nomad Foods 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.| Nomad Foods vs. Lancaster Colony | Nomad Foods vs. Treehouse Foods | Nomad Foods vs. John B Sanfilippo | Nomad Foods vs. Seneca Foods Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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