Correlation Between JC Penney and SUPERVALU INC

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

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

Diversification Opportunities for JC Penney and SUPERVALU INC

0.0

Correlation Coefficient

JC Penney  SUPERVALU INC

Pay attention - limited upside

The 3 months correlation between JCP and SUPERVALU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding J C Penney and SUPERVALU INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUPERVALU INC and JC Penney 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 C Penney are associated (or correlated) with SUPERVALU INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUPERVALU INC has no effect on the direction of JC Penney i.e., JC Penney and SUPERVALU INC go up and down completely randomly.

Pair Corralation between JC Penney and SUPERVALU INC

If you would invest (100.00) in SUPERVALU INC on January 25, 2024 and sell it today you would earn a total of  100.00  from holding SUPERVALU INC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

J C Penney  vs.  SUPERVALU INC

J C Penney

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J C Penney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, JC Penney is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

SUPERVALU INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUPERVALU INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SUPERVALU INC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JC Penney and SUPERVALU INC

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

The idea behind J C Penney and SUPERVALU INC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.