Correlation Between JM Smucker and Federal Home
Can any of the company-specific risk be diversified away by investing in both JM Smucker and Federal Home 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 Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JM Smucker and Federal Home Loan, you can compare the effects of market volatilities on JM Smucker and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM Smucker and Federal Home.
Diversification Opportunities for JM Smucker and Federal Home
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between SJM and Federal is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding JM Smucker and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of JM Smucker i.e., JM Smucker and Federal Home go up and down completely randomly.
Pair Corralation between JM Smucker and Federal Home
Considering the 90-day investment horizon JM Smucker is expected to generate 5.52 times less return on investment than Federal Home. But when comparing it to its historical volatility, JM Smucker is 2.06 times less risky than Federal Home. It trades about 0.1 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 531.00 in Federal Home Loan on December 29, 2023 and sell it today you would earn a total of 79.00 from holding Federal Home Loan or generate 14.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
JM Smucker vs. Federal Home Loan
Performance |
Timeline |
JM Smucker |
Federal Home Loan |
JM Smucker and Federal Home Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JM Smucker and Federal Home
The main advantage of trading using opposite JM Smucker and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JM Smucker position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.JM Smucker vs. Bunge Limited | JM Smucker vs. Altria Group | JM Smucker vs. Philip Morris International | JM Smucker vs. Everest Consolidator Acquisition |
Federal Home vs. Rocket CompaniesInc | Federal Home vs. UWM Holdings Corp | Federal Home vs. Mr Cooper Group | Federal Home vs. Walker Dunlop |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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