Correlation Between J J and Laird Superfood

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

Diversification Opportunities for J J and Laird Superfood

0.16

Correlation Coefficient

J J  Laird Superfood

Average diversification

The 3 months correlation between JJSF and Laird is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood 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 Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of J J i.e., J J and Laird Superfood go up and down completely randomly.

Pair Corralation between J J and Laird Superfood

Given the investment horizon of 90 days J J Snack is expected to under-perform the Laird Superfood. But the stock apears to be less risky and, when comparing its historical volatility, J J Snack is 4.62 times less risky than Laird Superfood. The stock trades about -0.08 of its potential returns per unit of risk. The Laird Superfood is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  493.00  in Laird Superfood on September 27, 2024 and sell it today you would earn a total of  287.00  from holding Laird Superfood or generate 58.22% return on investment over 90 days.

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

J J Snack  vs.  Laird Superfood

J J Snack

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Laird Superfood

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laird Superfood are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laird Superfood reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J J and Laird Superfood

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

The idea behind J J Snack and Laird Superfood 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .