Correlation Between McCormick Company and John B

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

By analyzing existing cross correlation between McCormick Company Incorporated and John B Sanfilippo, you can compare the effects of market volatilities on McCormick Company and John B 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 McCormick Company with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and John B.

Diversification Opportunities for McCormick Company and John B

0.44

Correlation Coefficient

McCormick Company  John B

Very weak diversification

The 3 months correlation between McCormick and John is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo and McCormick Company 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 McCormick Company Incorporated are associated (or correlated) with John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of McCormick Company i.e., McCormick Company and John B go up and down completely randomly.

Pair Corralation between McCormick Company and John B

Assuming the 90 days horizon McCormick Company Incorporated is expected to under-perform the John B. But the stock apears to be less risky and, when comparing its historical volatility, McCormick Company Incorporated is 1.2 times less risky than John B. The stock trades about -0.25 of its potential returns per unit of risk. The John B Sanfilippo is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  8,480  in John B Sanfilippo on October 23, 2024 and sell it today you would earn a total of  463.00  from holding John B Sanfilippo or generate 5.46% return on investment over 90 days.

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

McCormick Company Incorporated  vs.  John B Sanfilippo

McCormick Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McCormick Company Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

John B Sanfilippo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John B Sanfilippo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, John B is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with McCormick Company and John B

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

The idea behind McCormick Company Incorporated and John B Sanfilippo 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.