Correlation Between J+J SNACK and Infrastrutture Wireless

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

Diversification Opportunities for J+J SNACK and Infrastrutture Wireless

-0.75

Correlation Coefficient

J+J SNACK  Infrastrutture Wireless

Pay attention - limited upside

The 3 months correlation between J+J and Infrastrutture is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and Infrastrutture Wireless Italia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastrutture Wireless 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 Infrastrutture Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastrutture Wireless has no effect on the direction of J+J SNACK i.e., J+J SNACK and Infrastrutture Wireless go up and down completely randomly.

Pair Corralation between J+J SNACK and Infrastrutture Wireless

Assuming the 90 days trading horizon J+J SNACK is expected to generate 1.35 times less return on investment than Infrastrutture Wireless. In addition to that, J+J SNACK is 1.15 times more volatile than Infrastrutture Wireless Italiane. It trades about 0.01 of its total potential returns per unit of risk. Infrastrutture Wireless Italiane is currently generating about 0.01 per unit of volatility. If you would invest  968.00  in Infrastrutture Wireless Italiane on October 4, 2024 and sell it today you would earn a total of  10.00  from holding Infrastrutture Wireless Italiane or generate 1.03% return on investment over 90 days.

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

JJ SNACK FOODS  vs.  Infrastrutture Wireless Italia

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 comparatively stable basic indicators, J+J SNACK is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Infrastrutture Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with J+J SNACK and Infrastrutture Wireless

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

The idea behind JJ SNACK FOODS and Infrastrutture Wireless Italiane 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.