Correlation Between J J and Whole Earth

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

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

Diversification Opportunities for J J and Whole Earth

-0.53

Correlation Coefficient

J J  Whole Earth

Excellent diversification

The 3 months correlation between JJSF and Whole is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands and J J 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 J J Snack are associated (or correlated) with Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of J J i.e., J J and Whole Earth go up and down completely randomly.

Pair Corralation between J J and Whole Earth

Given the investment horizon of 90 days J J Snack is expected to generate 22.26 times more return on investment than Whole Earth. However, J J is 22.26 times more volatile than Whole Earth Brands. It trades about 0.19 of its potential returns per unit of risk. Whole Earth Brands is currently generating about 0.06 per unit of risk. If you would invest  13,940  in J J Snack on February 8, 2024 and sell it today you would earn a total of  2,107  from holding J J Snack or generate 15.11% return on investment over 90 days.

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

J J Snack  vs.  Whole Earth Brands

J J Snack

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J J Snack are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, J J may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Whole Earth Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Whole Earth Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Whole Earth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J J and Whole Earth

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

The idea behind J J Snack and Whole Earth Brands 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.