Correlation Between J+J SNACK and National Health

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

Diversification Opportunities for J+J SNACK and National Health

-0.06

Correlation Coefficient

J+J SNACK  National Health

Good diversification

The 3 months correlation between J+J and National is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of J+J SNACK i.e., J+J SNACK and National Health go up and down completely randomly.

Pair Corralation between J+J SNACK and National Health

Assuming the 90 days trading horizon J+J SNACK is expected to generate 2.31 times less return on investment than National Health. But when comparing it to its historical volatility, JJ SNACK FOODS is 1.45 times less risky than National Health. It trades about 0.05 of its potential returns per unit of risk. National Health Investors is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,988  in National Health Investors on September 15, 2024 and sell it today you would earn a total of  912.00  from holding National Health Investors or generate 15.23% return on investment over 90 days.

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

JJ SNACK FOODS  vs.  National Health Investors

JJ SNACK FOODS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

National Health Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Health Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 J+J SNACK and National Health

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

The idea behind JJ SNACK FOODS and National Health Investors 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..