Correlation Between McCormick Company and JBS SA
Can any of the company-specific risk be diversified away by investing in both McCormick Company and JBS SA 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 McCormick Company and JBS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McCormick Company Incorporated and JBS SA, you can compare the effects of market volatilities on McCormick Company and JBS SA 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 McCormick Company with a short position of JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and JBS SA.
Diversification Opportunities for McCormick Company and JBS SA
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McCormick and JBS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and McCormick Company 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 McCormick Company Incorporated are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of McCormick Company i.e., McCormick Company and JBS SA go up and down completely randomly.
Pair Corralation between McCormick Company and JBS SA
Assuming the 90 days horizon McCormick Company Incorporated is expected to under-perform the JBS SA. But the preferred stock apears to be less risky and, when comparing its historical volatility, McCormick Company Incorporated is 1.12 times less risky than JBS SA. The preferred stock trades about -0.01 of its potential returns per unit of risk. The JBS SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 637.00 in JBS SA on August 31, 2024 and sell it today you would earn a total of 594.00 from holding JBS SA or generate 93.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McCormick Company Incorporated vs. JBS SA
Performance |
| Timeline |
| McCormick Company |
| JBS SA |
McCormick Company and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McCormick Company and JBS SA
The main advantage of trading using opposite McCormick Company and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company position performs unexpectedly, JBS SA 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 JBS SA will offset losses from the drop in JBS SA's long position.| McCormick Company vs. Central Garden Pet | McCormick Company vs. Seneca Foods Corp | McCormick Company vs. Natures Sunshine Products | McCormick Company vs. Seneca Foods Corp |
| JBS SA vs. The A2 Milk | JBS SA vs. Altavoz Entertainment | JBS SA vs. Artisan Consumer Goods | JBS SA vs. General Mills |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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