Correlation Between John B and Marfrig Global

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

Diversification Opportunities for John B and Marfrig Global

-0.7

Correlation Coefficient

John B  Marfrig Global

Excellent diversification

The 3 months correlation between John and Marfrig is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of John B i.e., John B and Marfrig Global go up and down completely randomly.

Pair Corralation between John B and Marfrig Global

Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Marfrig Global. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 1.52 times less risky than Marfrig Global. The stock trades about 0.0 of its potential returns per unit of risk. The Marfrig Global Foods is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  243.00  in Marfrig Global Foods on September 12, 2024 and sell it today you would earn a total of  84.00  from holding Marfrig Global Foods or generate 34.57% return on investment over 90 days.

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

John B Sanfilippo  vs.  Marfrig Global Foods

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.

Marfrig Global Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John B and Marfrig Global

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

The idea behind John B Sanfilippo and Marfrig Global Foods 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.