Correlation Between JM Smucker and J J

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

By analyzing existing cross correlation between JM Smucker and J J Snack, you can compare the effects of market volatilities on JM Smucker and J J 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 JM Smucker with a short position of J J. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM Smucker and J J.

Diversification Opportunities for JM Smucker and J J

0.37

Correlation Coefficient

JM Smucker  J J

Weak diversification

The 3 months correlation between SJM and JJSF is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding JM Smucker and J J Snack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J J Snack and JM Smucker 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 JM Smucker are associated (or correlated) with J J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J J Snack has no effect on the direction of JM Smucker i.e., JM Smucker and J J go up and down completely randomly.

Pair Corralation between JM Smucker and J J

Considering the 90-day investment horizon JM Smucker is expected to under-perform the J J. But the stock apears to be less risky and, when comparing its historical volatility, JM Smucker is 1.17 times less risky than J J. The stock trades about -0.04 of its potential returns per unit of risk. The J J Snack is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  14,598  in J J Snack on September 24, 2024 and sell it today you would earn a total of  1,415  from holding J J Snack or generate 9.69% return on investment over 90 days.

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

JM Smucker  vs.  J J Snack

JM Smucker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JM Smucker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, JM Smucker is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 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.

Pair Trading with JM Smucker and J J

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

The idea behind JM Smucker and J J Snack 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.