Correlation Between Bunge and John B

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

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

Diversification Opportunities for Bunge and John B

0.71

Correlation Coefficient

Bunge  John B

Poor diversification

The 3 months correlation between Bunge and John is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited 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 Bunge 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 Bunge Limited 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 Bunge i.e., Bunge and John B go up and down completely randomly.

Pair Corralation between Bunge and John B

Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the John B. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 1.17 times less risky than John B. The stock trades about -0.12 of its potential returns per unit of risk. The John B Sanfilippo is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  9,487  in John B Sanfilippo on August 30, 2024 and sell it today you would lose (1,013) from holding John B Sanfilippo or give up 10.68% of portfolio value over 90 days.

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

Bunge Limited  vs.  John B Sanfilippo

Bunge Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bunge and John B

The main advantage of trading using opposite Bunge and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge 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 Bunge Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.