Correlation Between John B and Real Good

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

Diversification Opportunities for John B and Real Good

0.66

Correlation Coefficient

John B  Real Good

Poor diversification

The 3 months correlation between John and Real is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Real Good Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Good Food 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 Real Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Good Food has no effect on the direction of John B i.e., John B and Real Good go up and down completely randomly.

Pair Corralation between John B and Real Good

Given the investment horizon of 90 days John B Sanfilippo is expected to generate 0.36 times more return on investment than Real Good. However, John B Sanfilippo is 2.8 times less risky than Real Good. It trades about 0.16 of its potential returns per unit of risk. Real Good Food is currently generating about -0.07 per unit of risk. If you would invest  8,187  in John B Sanfilippo on September 20, 2024 and sell it today you would earn a total of  417.50  from holding John B Sanfilippo or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

John B Sanfilippo  vs.  Real Good Food

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.

Real Good Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Good Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with John B and Real Good

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

The idea behind John B Sanfilippo and Real Good Food 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.