Correlation Between J+J SNACK and BOSTON BEER

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

Diversification Opportunities for J+J SNACK and BOSTON BEER

0.95

Correlation Coefficient

J+J SNACK  BOSTON BEER

Almost no diversification

The 3 months correlation between J+J and BOSTON is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of J+J SNACK i.e., J+J SNACK and BOSTON BEER go up and down completely randomly.

Pair Corralation between J+J SNACK and BOSTON BEER

Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 1.24 times more return on investment than BOSTON BEER. However, J+J SNACK is 1.24 times more volatile than BOSTON BEER A . It trades about -0.2 of its potential returns per unit of risk. BOSTON BEER A is currently generating about -0.26 per unit of risk. If you would invest  16,222  in JJ SNACK FOODS on November 29, 2024 and sell it today you would lose (3,822) from holding JJ SNACK FOODS or give up 23.56% of portfolio value over 90 days.

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

JJ SNACK FOODS  vs.  BOSTON BEER A

JJ SNACK FOODS

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BOSTON BEER A

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with J+J SNACK and BOSTON BEER

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

The idea behind JJ SNACK FOODS and BOSTON BEER A 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.