Correlation Between Avi and John B

Can any of the company-specific risk be diversified away by investing in both Avi 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 Avi and John B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avi Ltd ADR and John B Sanfilippo, you can compare the effects of market volatilities on Avi 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 Avi with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avi and John B.

Diversification Opportunities for Avi and John B

-0.63

Correlation Coefficient

Avi  John B

Excellent diversification

The 3 months correlation between Avi and John is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Avi Ltd ADR 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 Avi 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 Avi Ltd ADR 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 Avi i.e., Avi and John B go up and down completely randomly.

Pair Corralation between Avi and John B

If you would invest  8,715  in John B Sanfilippo on October 3, 2024 and sell it today you would lose (4.00) from holding John B Sanfilippo or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Avi Ltd ADR  vs.  John B Sanfilippo

Avi Ltd ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avi Ltd ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Avi showed solid returns over the last few months and may actually be approaching a breakup point.

John B Sanfilippo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John B Sanfilippo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, John B is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Avi and John B

The main advantage of trading using opposite Avi and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avi 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.

The idea behind Avi Ltd ADR and John B Sanfilippo 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.