Correlation Between Post Holdings and John B
Can any of the company-specific risk be diversified away by investing in both Post Holdings and John B 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 Post Holdings and John B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post Holdings and John B Sanfilippo, you can compare the effects of market volatilities on Post Holdings and John B 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 Post Holdings with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post Holdings and John B.
Diversification Opportunities for Post Holdings and John B
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Post and John is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Post Holdings and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo and Post Holdings 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 Post Holdings are associated (or correlated) with John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of Post Holdings i.e., Post Holdings and John B go up and down completely randomly.
Pair Corralation between Post Holdings and John B
Given the investment horizon of 90 days Post Holdings is expected to generate 0.68 times more return on investment than John B. However, Post Holdings is 1.46 times less risky than John B. It trades about 0.04 of its potential returns per unit of risk. John B Sanfilippo is currently generating about 0.02 per unit of risk. If you would invest 9,475 in Post Holdings on August 24, 2024 and sell it today you would earn a total of 2,105 from holding Post Holdings or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Post Holdings vs. John B Sanfilippo
Performance |
| Timeline |
| Post Holdings |
| John B Sanfilippo |
Post Holdings and John B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Post Holdings and John B
The main advantage of trading using opposite Post Holdings and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post Holdings position performs unexpectedly, John B 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 John B will offset losses from the drop in John B's long position.| Post Holdings vs. Bellring Brands LLC | Post Holdings vs. Treehouse Foods | Post Holdings vs. Ingredion Incorporated | Post Holdings vs. JM Smucker |
| John B vs. Bellring Brands LLC | John B vs. Treehouse Foods | John B vs. Ingredion Incorporated | John B vs. JM Smucker |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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