Correlation Between Cars and J+J SNACK

Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars 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 Cars Inc and JJ SNACK FOODS, you can compare the effects of market volatilities on Cars 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 Cars with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and J+J SNACK.

Diversification Opportunities for Cars and J+J SNACK

0.62

Correlation Coefficient

Cars  J+J SNACK

Poor diversification

The 3 months correlation between Cars and J+J is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc 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 Cars 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 Cars Inc 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 Cars i.e., Cars and J+J SNACK go up and down completely randomly.

Pair Corralation between Cars and J+J SNACK

Assuming the 90 days horizon Cars Inc is expected to generate 1.03 times more return on investment than J+J SNACK. However, Cars is 1.03 times more volatile than JJ SNACK FOODS. It trades about -0.16 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about -0.2 per unit of risk. If you would invest  1,850  in Cars Inc on November 29, 2024 and sell it today you would lose (360.00) from holding Cars Inc or give up 19.46% of portfolio value over 90 days.

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

Cars Inc  vs.  JJ SNACK FOODS

Cars Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

JJ SNACK FOODS

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cars and J+J SNACK

The main advantage of trading using opposite Cars and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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 Cars Inc 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.