Correlation Between Vail Resorts and SJM Holdings

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

By analyzing existing cross correlation between Vail Resorts and SJM Holdings Ltd, you can compare the effects of market volatilities on Vail Resorts and SJM Holdings 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 Vail Resorts with a short position of SJM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vail Resorts and SJM Holdings.

Diversification Opportunities for Vail Resorts and SJM Holdings

0.81

Correlation Coefficient

Vail Resorts  SJM Holdings

Very poor diversification

The 3 months correlation between Vail and SJM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vail Resorts and SJM Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJM Holdings and Vail Resorts 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 Vail Resorts are associated (or correlated) with SJM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJM Holdings has no effect on the direction of Vail Resorts i.e., Vail Resorts and SJM Holdings go up and down completely randomly.

Pair Corralation between Vail Resorts and SJM Holdings

Considering the 90-day investment horizon Vail Resorts is expected to under-perform the SJM Holdings. In addition to that, Vail Resorts is 1.53 times more volatile than SJM Holdings Ltd. It trades about -0.12 of its total potential returns per unit of risk. SJM Holdings Ltd is currently generating about -0.14 per unit of volatility. If you would invest  126.00  in SJM Holdings Ltd on December 23, 2024 and sell it today you would lose (15.00) from holding SJM Holdings Ltd or give up 11.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Vail Resorts  vs.  SJM Holdings Ltd

Vail Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vail Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SJM Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days SJM Holdings Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Vail Resorts and SJM Holdings

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

The idea behind Vail Resorts and SJM Holdings Ltd 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.