Correlation Between John B and JBS SA

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

Diversification Opportunities for John B and JBS SA

-0.51

Correlation Coefficient

John B  JBS SA

Excellent diversification

The 3 months correlation between John and JBS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of John B i.e., John B and JBS SA go up and down completely randomly.

Pair Corralation between John B and JBS SA

Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the JBS SA. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 1.08 times less risky than JBS SA. The stock trades about -0.02 of its potential returns per unit of risk. The JBS SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,191  in JBS SA on September 13, 2024 and sell it today you would earn a total of  74.00  from holding JBS SA or generate 6.21% return on investment over 90 days.

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

John B Sanfilippo  vs.  JBS SA

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.

JBS SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, JBS SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with John B and JBS SA

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

The idea behind John B Sanfilippo and JBS SA 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.