Correlation Between Jammin Java and Calavo Growers

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

By analyzing existing cross correlation between Jammin Java Corp and Calavo Growers, you can compare the effects of market volatilities on Jammin Java and Calavo Growers 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 Jammin Java with a short position of Calavo Growers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jammin Java and Calavo Growers.

Diversification Opportunities for Jammin Java and Calavo Growers

-0.03

Correlation Coefficient

Jammin Java  Calavo Growers

Good diversification

The 3 months correlation between Jammin and Calavo is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jammin Java Corp and Calavo Growers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calavo Growers and Jammin Java 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 Jammin Java Corp are associated (or correlated) with Calavo Growers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calavo Growers has no effect on the direction of Jammin Java i.e., Jammin Java and Calavo Growers go up and down completely randomly.

Pair Corralation between Jammin Java and Calavo Growers

Given the investment horizon of 90 days Jammin Java Corp is expected to generate 102.63 times more return on investment than Calavo Growers. However, Jammin Java is 102.63 times more volatile than Calavo Growers. It trades about 0.26 of its potential returns per unit of risk. Calavo Growers is currently generating about -0.01 per unit of risk. If you would invest  0.01  in Jammin Java Corp on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Jammin Java Corp or generate 0.0% return on investment over 90 days.

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

Jammin Java Corp  vs.  Calavo Growers

Jammin Java Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jammin Java Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Jammin Java displayed solid returns over the last few months and may actually be approaching a breakup point.

Calavo Growers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Calavo Growers is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Jammin Java and Calavo Growers

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

The idea behind Jammin Java Corp and Calavo Growers 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.