Correlation Between BBB Foods and John B
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and John B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and John B Sanfilippo, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and John B.
Diversification Opportunities for BBB Foods and John B
Average diversification
The 3 months correlation between BBB and John is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods 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 BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and John B go up and down completely randomly.
Pair Corralation between BBB Foods and John B
Given the investment horizon of 90 days BBB Foods is expected to under-perform the John B. In addition to that, BBB Foods is 2.11 times more volatile than John B Sanfilippo. It trades about -0.08 of its total potential returns per unit of risk. John B Sanfilippo is currently generating about 0.06 per unit of volatility. If you would invest 8,575 in John B Sanfilippo on October 25, 2024 and sell it today you would earn a total of 256.00 from holding John B Sanfilippo or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. John B Sanfilippo
Performance |
| Timeline |
| BBB Foods |
| John B Sanfilippo |
BBB Foods and John B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and John B
The main advantage of trading using opposite BBB Foods and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. East Africa Metals | BBB Foods vs. Ihuman Inc | BBB Foods vs. Park Electrochemical | BBB Foods vs. Afya |
| John B vs. Lancaster Colony | John B vs. Treehouse Foods | John B vs. Seneca Foods Corp | John B vs. J J Snack |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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