Correlation Between John B and Branded Legacy

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

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

Diversification Opportunities for John B and Branded Legacy

-0.6

Correlation Coefficient

John B  Branded Legacy

Excellent diversification

The 3 months correlation between John and Branded is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Branded Legacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Branded Legacy and John B 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 John B Sanfilippo are associated (or correlated) with Branded Legacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Branded Legacy has no effect on the direction of John B i.e., John B and Branded Legacy go up and down completely randomly.

Pair Corralation between John B and Branded Legacy

Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Branded Legacy. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 5.83 times less risky than Branded Legacy. The stock trades about -0.14 of its potential returns per unit of risk. The Branded Legacy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Branded Legacy on December 27, 2024 and sell it today you would earn a total of  0.02  from holding Branded Legacy or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

John B Sanfilippo  vs.  Branded Legacy

John B Sanfilippo

Risk-Adjusted Performance

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

Branded Legacy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Branded Legacy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Branded Legacy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John B and Branded Legacy

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

The idea behind John B Sanfilippo and Branded Legacy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.