Correlation Between John B and Campbell Soup

Can any of the company-specific risk be diversified away by investing in both John B and Campbell Soup 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 Campbell Soup 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 Campbell Soup, you can compare the effects of market volatilities on John B and Campbell Soup 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 Campbell Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of John B and Campbell Soup.

Diversification Opportunities for John B and Campbell Soup

0.73

Correlation Coefficient

John B  Campbell Soup

Poor diversification

The 3 months correlation between John and Campbell is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup 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 Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of John B i.e., John B and Campbell Soup go up and down completely randomly.

Pair Corralation between John B and Campbell Soup

Given the investment horizon of 90 days John B Sanfilippo is expected to generate 1.39 times more return on investment than Campbell Soup. However, John B is 1.39 times more volatile than Campbell Soup. It trades about -0.01 of its potential returns per unit of risk. Campbell Soup is currently generating about -0.17 per unit of risk. If you would invest  9,181  in John B Sanfilippo on September 12, 2024 and sell it today you would lose (165.00) from holding John B Sanfilippo or give up 1.8% of portfolio value over 90 days.

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

John B Sanfilippo  vs.  Campbell Soup

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.

Campbell Soup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Campbell Soup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with John B and Campbell Soup

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

The idea behind John B Sanfilippo and Campbell Soup 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.