Correlation Between Perdoceo Education and J+J SNACK

Can any of the company-specific risk be diversified away by investing in both Perdoceo Education and J+J SNACK 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 Perdoceo Education and J+J SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perdoceo Education and JJ SNACK FOODS, you can compare the effects of market volatilities on Perdoceo Education and J+J SNACK 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 Perdoceo Education with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdoceo Education and J+J SNACK.

Diversification Opportunities for Perdoceo Education and J+J SNACK

0.83

Correlation Coefficient

Perdoceo Education  J+J SNACK

Very poor diversification

The 3 months correlation between Perdoceo and J+J is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Perdoceo Education and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS and Perdoceo Education 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 Perdoceo Education are associated (or correlated) with J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Perdoceo Education i.e., Perdoceo Education and J+J SNACK go up and down completely randomly.

Pair Corralation between Perdoceo Education and J+J SNACK

Assuming the 90 days horizon Perdoceo Education is expected to generate 1.92 times more return on investment than J+J SNACK. However, Perdoceo Education is 1.92 times more volatile than JJ SNACK FOODS. It trades about 0.06 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.02 per unit of risk. If you would invest  1,319  in Perdoceo Education on October 4, 2024 and sell it today you would earn a total of  1,181  from holding Perdoceo Education or generate 89.54% return on investment over 90 days.

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

Perdoceo Education  vs.  JJ SNACK FOODS

Perdoceo Education

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perdoceo Education are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Perdoceo Education reported solid returns over the last few months and may actually be approaching a breakup point.

JJ SNACK FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Perdoceo Education and J+J SNACK

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

The idea behind Perdoceo Education and JJ SNACK 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.