Correlation Between Real Good and John B

Can any of the company-specific risk be diversified away by investing in both Real Good and John B 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 Real Good and John B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Real Good Food and John B Sanfilippo, you can compare the effects of market volatilities on Real Good and John B 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 Real Good with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Good and John B.

Diversification Opportunities for Real Good and John B

0.7

Correlation Coefficient

Real Good  John B

Poor diversification

The 3 months correlation between Real and John is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Real Good Food and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo and Real Good 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 Real Good Food are associated (or correlated) with John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of Real Good i.e., Real Good and John B go up and down completely randomly.

Pair Corralation between Real Good and John B

Considering the 90-day investment horizon Real Good Food is expected to under-perform the John B. In addition to that, Real Good is 2.54 times more volatile than John B Sanfilippo. It trades about -0.14 of its total potential returns per unit of risk. John B Sanfilippo is currently generating about 0.06 per unit of volatility. If you would invest  8,409  in John B Sanfilippo on September 23, 2024 and sell it today you would earn a total of  139.00  from holding John B Sanfilippo or generate 1.65% return on investment over 90 days.

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

Real Good Food  vs.  John B Sanfilippo

Real Good Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Good Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

John B Sanfilippo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John B Sanfilippo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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 Real Good and John B

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

The idea behind Real Good Food and John B Sanfilippo 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..