Correlation Between Nestle SA and JM Smucker
Can any of the company-specific risk be diversified away by investing in both Nestle SA and JM Smucker 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 Nestle SA and JM Smucker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and JM Smucker, you can compare the effects of market volatilities on Nestle SA and JM Smucker 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 Nestle SA with a short position of JM Smucker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and JM Smucker.
Diversification Opportunities for Nestle SA and JM Smucker
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nestle and SJM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker and Nestle SA 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 Nestle SA are associated (or correlated) with JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Nestle SA i.e., Nestle SA and JM Smucker go up and down completely randomly.
Pair Corralation between Nestle SA and JM Smucker
Assuming the 90 days horizon Nestle SA is expected to generate 0.81 times more return on investment than JM Smucker. However, Nestle SA is 1.24 times less risky than JM Smucker. It trades about -0.19 of its potential returns per unit of risk. JM Smucker is currently generating about -0.36 per unit of risk. If you would invest 10,687 in Nestle SA on January 20, 2024 and sell it today you would lose (466.00) from holding Nestle SA or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nestle SA vs. JM Smucker
Performance |
| Timeline |
| Nestle SA |
| JM Smucker |
Nestle SA and JM Smucker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle SA and JM Smucker
The main advantage of trading using opposite Nestle SA and JM Smucker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, JM Smucker 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 JM Smucker will offset losses from the drop in JM Smucker's long position.| Nestle SA vs. Kellanova | Nestle SA vs. Lancaster Colony | Nestle SA vs. The A2 Milk | Nestle SA vs. Altavoz Entertainment |
| JM Smucker vs. Green Globe International | JM Smucker vs. Greenlane Holdings | JM Smucker vs. 22nd Century Group | JM Smucker vs. 1606 Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |