Correlation Between J+J SNACK and United Rentals

Can any of the company-specific risk be diversified away by investing in both J+J SNACK and United Rentals 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 United Rentals 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 United Rentals, you can compare the effects of market volatilities on J+J SNACK and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and United Rentals.

Diversification Opportunities for J+J SNACK and United Rentals

0.61

Correlation Coefficient

J+J SNACK  United Rentals

Poor diversification

The 3 months correlation between J+J and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of J+J SNACK i.e., J+J SNACK and United Rentals go up and down completely randomly.

Pair Corralation between J+J SNACK and United Rentals

Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.39 times more return on investment than United Rentals. However, JJ SNACK FOODS is 2.56 times less risky than United Rentals. It trades about 0.01 of its potential returns per unit of risk. United Rentals is currently generating about -0.03 per unit of risk. If you would invest  15,127  in JJ SNACK FOODS on September 29, 2024 and sell it today you would earn a total of  73.00  from holding JJ SNACK FOODS or generate 0.48% return on investment over 90 days.

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

JJ SNACK FOODS  vs.  United Rentals

JJ SNACK FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

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

United Rentals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United Rentals 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 United Rentals

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

The idea behind JJ SNACK FOODS and United Rentals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.