Correlation Between John Bean and Middleby Corp

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

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

Diversification Opportunities for John Bean and Middleby Corp

0.35

Correlation Coefficient

John Bean  Middleby Corp

Weak diversification

The 3 months correlation between John and Middleby is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Middleby Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middleby Corp and John Bean 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 Bean Technologies are associated (or correlated) with Middleby Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middleby Corp has no effect on the direction of John Bean i.e., John Bean and Middleby Corp go up and down completely randomly.

Pair Corralation between John Bean and Middleby Corp

Considering the 90-day investment horizon John Bean Technologies is expected to generate 1.21 times more return on investment than Middleby Corp. However, John Bean is 1.21 times more volatile than Middleby Corp. It trades about 0.12 of its potential returns per unit of risk. Middleby Corp is currently generating about -0.02 per unit of risk. If you would invest  11,558  in John Bean Technologies on October 6, 2024 and sell it today you would earn a total of  974.00  from holding John Bean Technologies or generate 8.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

John Bean Technologies  vs.  Middleby Corp

John Bean Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Bean Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, John Bean unveiled solid returns over the last few months and may actually be approaching a breakup point.

Middleby Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Middleby Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Middleby Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with John Bean and Middleby Corp

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

The idea behind John Bean Technologies and Middleby Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.