Correlation Between John B and Glucose Health

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

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

Diversification Opportunities for John B and Glucose Health

0.5

Correlation Coefficient

John B  Glucose Health

Very weak diversification

The 3 months correlation between John and Glucose is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding John B Sanfilippo and Glucose Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glucose Health and John B 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 John B Sanfilippo are associated (or correlated) with Glucose Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glucose Health has no effect on the direction of John B i.e., John B and Glucose Health go up and down completely randomly.

Pair Corralation between John B and Glucose Health

Given the investment horizon of 90 days John B Sanfilippo is expected to under-perform the Glucose Health. But the stock apears to be less risky and, when comparing its historical volatility, John B Sanfilippo is 7.85 times less risky than Glucose Health. The stock trades about -0.06 of its potential returns per unit of risk. The Glucose Health is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Glucose Health on September 16, 2024 and sell it today you would lose (1.00) from holding Glucose Health or give up 5.88% of portfolio value over 90 days.

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

John B Sanfilippo  vs.  Glucose Health

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.

Glucose Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glucose Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Glucose Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with John B and Glucose Health

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

The idea behind John B Sanfilippo and Glucose Health 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.