Correlation Between Campbell Soup and J J

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

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

Diversification Opportunities for Campbell Soup and J J

-0.3

Correlation Coefficient

Campbell Soup  J J

Very good diversification

The 3 months correlation between Campbell and JJSF is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and J J Snack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J J Snack and Campbell Soup 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 Campbell Soup are associated (or correlated) with J J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J J Snack has no effect on the direction of Campbell Soup i.e., Campbell Soup and J J go up and down completely randomly.

Pair Corralation between Campbell Soup and J J

Considering the 90-day investment horizon Campbell Soup is expected to generate 4.52 times less return on investment than J J. But when comparing it to its historical volatility, Campbell Soup is 2.97 times less risky than J J. It trades about 0.12 of its potential returns per unit of risk. J J Snack is currently generating about 0.19 of returns per unit of risk over similar time horizon. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Campbell Soup  vs.  J J Snack

Campbell Soup

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Campbell Soup are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Campbell Soup is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

J J Snack

Risk-Adjusted Performance

6 of 100

Modest

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 conflicting basic indicators, J J may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Campbell Soup and J J

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

The idea behind Campbell Soup and J J Snack 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 Commodity Directory module to find actively traded commodities issued by global exchanges.