Correlation Between J+J SNACK and CARSALESCOM

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

Diversification Opportunities for J+J SNACK and CARSALESCOM

0.7

Correlation Coefficient

J+J SNACK  CARSALESCOM

Poor diversification

The 3 months correlation between J+J and CARSALESCOM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of J+J SNACK i.e., J+J SNACK and CARSALESCOM go up and down completely randomly.

Pair Corralation between J+J SNACK and CARSALESCOM

Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.37 times more return on investment than CARSALESCOM. However, JJ SNACK FOODS is 2.67 times less risky than CARSALESCOM. It trades about 0.27 of its potential returns per unit of risk. CARSALESCOM is currently generating about -0.33 per unit of risk. If you would invest  15,724  in JJ SNACK FOODS on September 20, 2024 and sell it today you would earn a total of  476.00  from holding JJ SNACK FOODS or generate 3.03% return on investment over 90 days.

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

JJ SNACK FOODS  vs.  CARSALESCOM

JJ SNACK FOODS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CARSALESCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with J+J SNACK and CARSALESCOM

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

The idea behind JJ SNACK FOODS and CARSALESCOM 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.