Correlation Between Nestlé SA and J+J SNACK
Can any of the company-specific risk be diversified away by investing in both Nestlé SA and J+J SNACK 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 Nestlé SA and J+J SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestl SA and JJ SNACK FOODS, you can compare the effects of market volatilities on Nestlé SA and J+J SNACK 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 Nestlé SA with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestlé SA and J+J SNACK.
Diversification Opportunities for Nestlé SA and J+J SNACK
Pay attention - limited upside
The 3 months correlation between Nestlé and J+J is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS and Nestlé SA 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 Nestl SA are associated (or correlated) with J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Nestlé SA i.e., Nestlé SA and J+J SNACK go up and down completely randomly.
Pair Corralation between Nestlé SA and J+J SNACK
Assuming the 90 days trading horizon Nestl SA is expected to under-perform the J+J SNACK. But the stock apears to be less risky and, when comparing its historical volatility, Nestl SA is 1.23 times less risky than J+J SNACK. The stock trades about -0.06 of its potential returns per unit of risk. The JJ SNACK FOODS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15,162 in JJ SNACK FOODS on September 12, 2024 and sell it today you would earn a total of 1,038 from holding JJ SNACK FOODS or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestl SA vs. JJ SNACK FOODS
Performance |
| Timeline |
| Nestlé SA |
| JJ SNACK FOODS |
Nestlé SA and J+J SNACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestlé SA and J+J SNACK
The main advantage of trading using opposite Nestlé SA and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestlé SA position performs unexpectedly, J+J SNACK 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 J+J SNACK will offset losses from the drop in J+J SNACK's long position.| Nestlé SA vs. Plastic Omnium | Nestlé SA vs. CDL INVESTMENT | Nestlé SA vs. New Residential Investment | Nestlé SA vs. Compagnie Plastic Omnium |
| J+J SNACK vs. Hormel Foods | J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. SIVERS SEMICONDUCTORS AB | J+J SNACK vs. NorAm Drilling AS |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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