Correlation Between Freshpet and John B
Can any of the company-specific risk be diversified away by investing in both Freshpet 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 Freshpet and John B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and John B Sanfilippo, you can compare the effects of market volatilities on Freshpet 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 Freshpet with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and John B.
Diversification Opportunities for Freshpet and John B
Weak diversification
The 3 months correlation between Freshpet and John is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet 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 Freshpet 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 Freshpet 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 Freshpet i.e., Freshpet and John B go up and down completely randomly.
Pair Corralation between Freshpet and John B
Given the investment horizon of 90 days Freshpet is expected to generate 1.65 times more return on investment than John B. However, Freshpet is 1.65 times more volatile than John B Sanfilippo. It trades about 0.21 of its potential returns per unit of risk. John B Sanfilippo is currently generating about 0.05 per unit of risk. If you would invest 6,870 in Freshpet on February 24, 2024 and sell it today you would earn a total of 5,947 from holding Freshpet or generate 86.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Freshpet vs. John B Sanfilippo
Performance |
Timeline |
Freshpet |
John B Sanfilippo |
Freshpet and John B Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freshpet and John B
The main advantage of trading using opposite Freshpet and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet 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.Freshpet vs. J J Snack | Freshpet vs. Central Garden Pet | Freshpet vs. Central Garden Pet | Freshpet vs. McCormick Company Incorporated |
John B vs. J J Snack | John B vs. Central Garden Pet | John B vs. Central Garden Pet | John B vs. McCormick Company Incorporated |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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