Correlation Between J J and Edible Garden

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Can any of the company-specific risk be diversified away by investing in both J J and Edible Garden 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 and Edible Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J J Snack and Edible Garden AG, you can compare the effects of market volatilities on J J and Edible Garden 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 with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and Edible Garden.

Diversification Opportunities for J J and Edible Garden

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between JJSF and Edible is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and J J 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 J J Snack are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of J J i.e., J J and Edible Garden go up and down completely randomly.

Pair Corralation between J J and Edible Garden

Given the investment horizon of 90 days J J Snack is expected to under-perform the Edible Garden. But the stock apears to be less risky and, when comparing its historical volatility, J J Snack is 8.07 times less risky than Edible Garden. The stock trades about -0.04 of its potential returns per unit of risk. The Edible Garden AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Edible Garden AG on September 24, 2024 and sell it today you would earn a total of  3.00  from holding Edible Garden AG or generate 14.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

J J Snack  vs.  Edible Garden AG

 Performance 
       Timeline  
J J Snack 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days J J Snack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, J J is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Edible Garden AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Edible Garden AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

J J and Edible Garden Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with J J and Edible Garden

The main advantage of trading using opposite J J and Edible Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J J position performs unexpectedly, Edible Garden 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 Edible Garden will offset losses from the drop in Edible Garden's long position.
The idea behind J J Snack and Edible Garden AG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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