Correlation Between John Bean and Nordson

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

Diversification Opportunities for John Bean and Nordson

-0.44

Correlation Coefficient

John Bean  Nordson

Very good diversification

The 3 months correlation between John and Nordson is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Nordson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordson 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 Nordson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordson has no effect on the direction of John Bean i.e., John Bean and Nordson go up and down completely randomly.

Pair Corralation between John Bean and Nordson

Considering the 90-day investment horizon John Bean Technologies is expected to generate 1.43 times more return on investment than Nordson. However, John Bean is 1.43 times more volatile than Nordson. It trades about 0.04 of its potential returns per unit of risk. Nordson is currently generating about -0.01 per unit of risk. If you would invest  9,666  in John Bean Technologies on September 29, 2024 and sell it today you would earn a total of  3,172  from holding John Bean Technologies or generate 32.82% return on investment over 90 days.

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

John Bean Technologies  vs.  Nordson

John Bean Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in John Bean Technologies are ranked lower than 12 (%) 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.

Nordson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with John Bean and Nordson

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

The idea behind John Bean Technologies and Nordson 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.