Correlation Between Performance Food and J+J SNACK
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food 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 Performance Food Group and JJ SNACK FOODS, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and J+J SNACK.
Diversification Opportunities for Performance Food and J+J SNACK
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Performance and J+J is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group 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 Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and J+J SNACK go up and down completely randomly.
Pair Corralation between Performance Food and J+J SNACK
Assuming the 90 days trading horizon Performance Food Group is expected to generate 1.21 times more return on investment than J+J SNACK. However, Performance Food is 1.21 times more volatile than JJ SNACK FOODS. It trades about 0.3 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.2 per unit of risk. If you would invest 7,550 in Performance Food Group on August 29, 2024 and sell it today you would earn a total of 800.00 from holding Performance Food Group or generate 10.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. JJ SNACK FOODS
Performance |
| Timeline |
| Performance Food |
| JJ SNACK FOODS |
Performance Food and J+J SNACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and J+J SNACK
The main advantage of trading using opposite Performance Food and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. NMI Holdings | J+J SNACK vs. Origin Agritech | J+J SNACK vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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