Correlation Between JM Smucker and Steakholder Foods

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Can any of the company-specific risk be diversified away by investing in both JM Smucker and Steakholder 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 Steakholder 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 Steakholder Foods, you can compare the effects of market volatilities on JM Smucker and Steakholder 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 Steakholder Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM Smucker and Steakholder Foods.

Diversification Opportunities for JM Smucker and Steakholder Foods

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between SJM and Steakholder is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JM Smucker and Steakholder Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steakholder 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 Steakholder Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steakholder Foods has no effect on the direction of JM Smucker i.e., JM Smucker and Steakholder Foods go up and down completely randomly.

Pair Corralation between JM Smucker and Steakholder Foods

Considering the 90-day investment horizon JM Smucker is expected to generate 0.47 times more return on investment than Steakholder Foods. However, JM Smucker is 2.13 times less risky than Steakholder Foods. It trades about 0.01 of its potential returns per unit of risk. Steakholder Foods is currently generating about -0.23 per unit of risk. If you would invest  11,526  in JM Smucker on September 6, 2024 and sell it today you would earn a total of  18.00  from holding JM Smucker or generate 0.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

JM Smucker  vs.  Steakholder Foods

 Performance 
       Timeline  
JM Smucker 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days JM Smucker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, JM Smucker is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Steakholder Foods 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Steakholder Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

JM Smucker and Steakholder Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JM Smucker and Steakholder Foods

The main advantage of trading using opposite JM Smucker and Steakholder Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JM Smucker position performs unexpectedly, Steakholder 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 Steakholder Foods will offset losses from the drop in Steakholder Foods' long position.
The idea behind JM Smucker and Steakholder Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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