Correlation Between Butterfly Network and SMUCKER

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

By analyzing existing cross correlation between Butterfly Network and SMUCKER J M, you can compare the effects of market volatilities on Butterfly Network and SMUCKER 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 Butterfly Network with a short position of SMUCKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butterfly Network and SMUCKER.

Diversification Opportunities for Butterfly Network and SMUCKER

-0.11

Correlation Coefficient

Butterfly Network  SMUCKER

Good diversification

The 3 months correlation between Butterfly and SMUCKER is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network and SMUCKER J M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMUCKER J M and Butterfly Network 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 Butterfly Network are associated (or correlated) with SMUCKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMUCKER J M has no effect on the direction of Butterfly Network i.e., Butterfly Network and SMUCKER go up and down completely randomly.

Pair Corralation between Butterfly Network and SMUCKER

Given the investment horizon of 90 days Butterfly Network is expected to generate 5.98 times more return on investment than SMUCKER. However, Butterfly Network is 5.98 times more volatile than SMUCKER J M. It trades about 0.19 of its potential returns per unit of risk. SMUCKER J M is currently generating about -0.12 per unit of risk. If you would invest  183.00  in Butterfly Network on September 16, 2024 and sell it today you would earn a total of  156.00  from holding Butterfly Network or generate 85.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.15%
Values	Daily Returns

Butterfly Network  vs.  SMUCKER J M

Butterfly Network

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Butterfly Network are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Butterfly Network showed solid returns over the last few months and may actually be approaching a breakup point.

SMUCKER J M

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMUCKER J M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SMUCKER J M investors.

Pair Trading with Butterfly Network and SMUCKER

The main advantage of trading using opposite Butterfly Network and SMUCKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butterfly Network position performs unexpectedly, SMUCKER 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 SMUCKER will offset losses from the drop in SMUCKER's long position.

The idea behind Butterfly Network and SMUCKER J M 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.