Correlation Between J+J SNACK and Adobe

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

By analyzing existing cross correlation between JJ SNACK FOODS and Adobe Inc, you can compare the effects of market volatilities on J+J SNACK and Adobe 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 SNACK with a short position of Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and Adobe.

Diversification Opportunities for J+J SNACK and Adobe

0.28

Correlation Coefficient

J+J SNACK  Adobe

Modest diversification

The 3 months correlation between J+J and Adobe is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of J+J SNACK i.e., J+J SNACK and Adobe go up and down completely randomly.

Pair Corralation between J+J SNACK and Adobe

Assuming the 90 days trading horizon JJ SNACK FOODS is expected to under-perform the Adobe. But the stock apears to be less risky and, when comparing its historical volatility, JJ SNACK FOODS is 3.18 times less risky than Adobe. The stock trades about -0.04 of its potential returns per unit of risk. The Adobe Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  47,085  in Adobe Inc on September 12, 2024 and sell it today you would earn a total of  4,775  from holding Adobe Inc or generate 10.14% return on investment over 90 days.

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

JJ SNACK FOODS  vs.  Adobe Inc

JJ SNACK FOODS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Adobe Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with J+J SNACK and Adobe

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

The idea behind JJ SNACK FOODS and Adobe Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.