Correlation Between Hormel Foods and John B

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

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

Diversification Opportunities for Hormel Foods and John B

0.31

Correlation Coefficient

Hormel Foods  John B

Weak diversification

The 3 months correlation between Hormel and John is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods 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 Hormel Foods 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 Hormel Foods 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 Hormel Foods i.e., Hormel Foods and John B go up and down completely randomly.

Pair Corralation between Hormel Foods and John B

Considering the 90-day investment horizon Hormel Foods is expected to generate 1.04 times more return on investment than John B. However, Hormel Foods is 1.04 times more volatile than John B Sanfilippo. It trades about 0.32 of its potential returns per unit of risk. John B Sanfilippo is currently generating about 0.17 per unit of risk. If you would invest  3,036  in Hormel Foods on September 12, 2024 and sell it today you would earn a total of  319.00  from holding Hormel Foods or generate 10.51% return on investment over 90 days.

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

Hormel Foods  vs.  John B Sanfilippo

Hormel Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hormel Foods are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Hormel Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Hormel Foods and John B

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

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.