Correlation Between Campbell Soup and JM Smucker

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

By analyzing existing cross correlation between Campbell Soup and JM Smucker, you can compare the effects of market volatilities on Campbell Soup and JM 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 Campbell Soup with a short position of JM Smucker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and JM Smucker.

Diversification Opportunities for Campbell Soup and JM Smucker

0.92

Correlation Coefficient

Campbell Soup  JM Smucker

Almost no diversification

The 3 months correlation between Campbell and SJM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker and Campbell Soup 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 Campbell Soup are associated (or correlated) with JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Campbell Soup i.e., Campbell Soup and JM Smucker go up and down completely randomly.

Pair Corralation between Campbell Soup and JM Smucker

Considering the 90-day investment horizon Campbell Soup is expected to under-perform the JM Smucker. In addition to that, Campbell Soup is 1.03 times more volatile than JM Smucker. It trades about -0.1 of its total potential returns per unit of risk. JM Smucker is currently generating about -0.03 per unit of volatility. If you would invest  11,658  in JM Smucker on November 28, 2024 and sell it today you would lose (411.00) from holding JM Smucker or give up 3.53% of portfolio value over 90 days.

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

Campbell Soup  vs.  JM Smucker

Campbell Soup

Risk-Adjusted Performance

Very Weak

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

JM Smucker

Risk-Adjusted Performance

Very Weak

Over the last 90 days JM Smucker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, JM Smucker is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Campbell Soup and JM Smucker

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

The idea behind Campbell Soup and JM Smucker 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.