Correlation Between J J and ConAgra Foods

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

By analyzing existing cross correlation between J J Snack and ConAgra Foods, you can compare the effects of market volatilities on J J and ConAgra Foods 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 with a short position of ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and ConAgra Foods.

Diversification Opportunities for J J and ConAgra Foods

0.74

Correlation Coefficient

J J  ConAgra Foods

Poor diversification

The 3 months correlation between JJSF and ConAgra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods and J J 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 J J Snack are associated (or correlated) with ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of J J i.e., J J and ConAgra Foods go up and down completely randomly.

Pair Corralation between J J and ConAgra Foods

Given the investment horizon of 90 days J J Snack is expected to under-perform the ConAgra Foods. But the stock apears to be less risky and, when comparing its historical volatility, J J Snack is 1.01 times less risky than ConAgra Foods. The stock trades about -0.14 of its potential returns per unit of risk. The ConAgra Foods is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,717  in ConAgra Foods on December 28, 2024 and sell it today you would lose (71.00) from holding ConAgra Foods or give up 2.61% of portfolio value over 90 days.

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

J J Snack  vs.  ConAgra Foods

J J Snack

Risk-Adjusted Performance

Very Weak

Over the last 90 days J J Snack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ConAgra Foods

Risk-Adjusted Performance

Very Weak

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

Pair Trading with J J and ConAgra Foods

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

The idea behind J J Snack and ConAgra Foods 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.