Correlation Between J J and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both J J and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee, you can compare the effects of market volatilities on J J and Westrock Coffee 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 Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and Westrock Coffee.
Diversification Opportunities for J J and Westrock Coffee
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JJSF and Westrock is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of J J i.e., J J and Westrock Coffee go up and down completely randomly.
Pair Corralation between J J and Westrock Coffee
Given the investment horizon of 90 days J J Snack is expected to generate 0.62 times more return on investment than Westrock Coffee. However, J J Snack is 1.62 times less risky than Westrock Coffee. It trades about 0.02 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.03 per unit of risk. If you would invest 15,363 in J J Snack on August 24, 2024 and sell it today you would earn a total of 1,753 from holding J J Snack or generate 11.41% 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. Westrock Coffee
Performance |
| Timeline |
| J J Snack |
| Westrock Coffee |
J J and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J J and Westrock Coffee
The main advantage of trading using opposite J J and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J J position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.The idea behind J J Snack and Westrock Coffee 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.| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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