Correlation Between JM Smucker and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both JM Smucker and Marfrig Global 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 Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JM Smucker and Marfrig Global Foods, you can compare the effects of market volatilities on JM Smucker and Marfrig Global 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 Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM Smucker and Marfrig Global.
Diversification Opportunities for JM Smucker and Marfrig Global
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SJM and Marfrig is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding JM Smucker and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of JM Smucker i.e., JM Smucker and Marfrig Global go up and down completely randomly.
Pair Corralation between JM Smucker and Marfrig Global
Considering the 90-day investment horizon JM Smucker is expected to under-perform the Marfrig Global. But the stock apears to be less risky and, when comparing its historical volatility, JM Smucker is 2.24 times less risky than Marfrig Global. The stock trades about -0.03 of its potential returns per unit of risk. The Marfrig Global Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 151.00 in Marfrig Global Foods on June 9, 2024 and sell it today you would earn a total of 105.00 from holding Marfrig Global Foods or generate 69.54% 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. Marfrig Global Foods
Performance |
Timeline |
JM Smucker |
Marfrig Global Foods |
JM Smucker and Marfrig Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JM Smucker and Marfrig Global
The main advantage of trading using opposite JM Smucker and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JM Smucker position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global's long position.The idea behind JM Smucker and Marfrig Global Foods 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.Marfrig Global vs. Kellanova | Marfrig Global vs. Lancaster Colony | Marfrig Global vs. The A2 Milk | Marfrig Global vs. Artisan Consumer Goods |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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