Correlation Between JBS SA and Central Garden

Can any of the company-specific risk be diversified away by investing in both JBS SA and Central Garden 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 JBS SA and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JBS SA and Central Garden Pet, you can compare the effects of market volatilities on JBS SA and Central Garden 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 JBS SA with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBS SA and Central Garden.

Diversification Opportunities for JBS SA and Central Garden

0.54

Correlation Coefficient

JBS SA  Central Garden

Very weak diversification

The 3 months correlation between JBS and Central is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding JBS SA and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and JBS SA 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 JBS SA are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of JBS SA i.e., JBS SA and Central Garden go up and down completely randomly.

Pair Corralation between JBS SA and Central Garden

Assuming the 90 days horizon JBS SA is expected to generate 1.27 times more return on investment than Central Garden. However, JBS SA is 1.27 times more volatile than Central Garden Pet. It trades about 0.05 of its potential returns per unit of risk. Central Garden Pet is currently generating about 0.01 per unit of risk. If you would invest  749.00  in JBS SA on October 9, 2024 and sell it today you would earn a total of  436.00  from holding JBS SA or generate 58.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

JBS SA  vs.  Central Garden Pet

JBS SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, JBS SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Central Garden Pet

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Garden Pet are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Central Garden sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JBS SA and Central Garden

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

The idea behind JBS SA and Central Garden Pet 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.