Correlation Between JM Smucker and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both JM Smucker and Nomad Foods 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 JM Smucker and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JM Smucker and Nomad Foods, you can compare the effects of market volatilities on JM Smucker and Nomad Foods 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 JM Smucker with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM Smucker and Nomad Foods.
Diversification Opportunities for JM Smucker and Nomad Foods
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SJM and Nomad is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JM Smucker and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and JM Smucker 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 JM Smucker are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of JM Smucker i.e., JM Smucker and Nomad Foods go up and down completely randomly.
Pair Corralation between JM Smucker and Nomad Foods
Considering the 90-day investment horizon JM Smucker is expected to under-perform the Nomad Foods. But the stock apears to be less risky and, when comparing its historical volatility, JM Smucker is 1.23 times less risky than Nomad Foods. The stock trades about -0.02 of its potential returns per unit of risk. The Nomad Foods is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,768 in Nomad Foods on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Nomad Foods or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JM Smucker vs. Nomad Foods
Performance |
| Timeline |
| JM Smucker |
| Nomad Foods |
JM Smucker and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JM Smucker and Nomad Foods
The main advantage of trading using opposite JM Smucker and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JM Smucker position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| JM Smucker vs. Bellring Brands LLC | JM Smucker vs. Ingredion Incorporated | JM Smucker vs. Nomad Foods | JM Smucker vs. Simply Good Foods |
| Nomad Foods vs. Lancaster Colony | Nomad Foods vs. Treehouse Foods | Nomad Foods vs. John B Sanfilippo | Nomad Foods vs. Seneca Foods Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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