Correlation Between J+J SNACK and IDP EDUCATION

Can any of the company-specific risk be diversified away by investing in both J+J SNACK and IDP EDUCATION 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 J+J SNACK and IDP EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JJ SNACK FOODS and IDP EDUCATION LTD, you can compare the effects of market volatilities on J+J SNACK and IDP EDUCATION 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 J+J SNACK with a short position of IDP EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and IDP EDUCATION.

Diversification Opportunities for J+J SNACK and IDP EDUCATION

-0.05

Correlation Coefficient

J+J SNACK  IDP EDUCATION

Good diversification

The 3 months correlation between J+J and IDP is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and IDP EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDP EDUCATION LTD and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with IDP EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDP EDUCATION LTD has no effect on the direction of J+J SNACK i.e., J+J SNACK and IDP EDUCATION go up and down completely randomly.

Pair Corralation between J+J SNACK and IDP EDUCATION

Assuming the 90 days trading horizon JJ SNACK FOODS is expected to under-perform the IDP EDUCATION. But the stock apears to be less risky and, when comparing its historical volatility, JJ SNACK FOODS is 5.35 times less risky than IDP EDUCATION. The stock trades about -0.54 of its potential returns per unit of risk. The IDP EDUCATION LTD is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  680.00  in IDP EDUCATION LTD on October 22, 2024 and sell it today you would earn a total of  70.00  from holding IDP EDUCATION LTD or generate 10.29% return on investment over 90 days.

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

JJ SNACK FOODS  vs.  IDP EDUCATION LTD

JJ SNACK FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JJ SNACK FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

IDP EDUCATION LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDP EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IDP EDUCATION is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with J+J SNACK and IDP EDUCATION

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

The idea behind JJ SNACK FOODS and IDP EDUCATION LTD 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.