Correlation Between Tootsie Roll and John B

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

By analyzing existing cross correlation between Tootsie Roll Industries and John B Sanfilippo, you can compare the effects of market volatilities on Tootsie Roll and John B 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 Tootsie Roll with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tootsie Roll and John B.

Diversification Opportunities for Tootsie Roll and John B

0.64

Correlation Coefficient

Tootsie Roll  John B

Poor diversification

The 3 months correlation between Tootsie and John is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo and Tootsie Roll 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 Tootsie Roll Industries are associated (or correlated) with John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of Tootsie Roll i.e., Tootsie Roll and John B go up and down completely randomly.

Pair Corralation between Tootsie Roll and John B

Allowing for the 90-day total investment horizon Tootsie Roll Industries is expected to under-perform the John B. But the stock apears to be less risky and, when comparing its historical volatility, Tootsie Roll Industries is 1.43 times less risky than John B. The stock trades about -0.14 of its potential returns per unit of risk. The John B Sanfilippo is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,105  in John B Sanfilippo on March 4, 2024 and sell it today you would lose (22.00) from holding John B Sanfilippo or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tootsie Roll Industries  vs.  John B Sanfilippo

Tootsie Roll Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tootsie Roll Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

John B Sanfilippo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tootsie Roll and John B

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

The idea behind Tootsie Roll Industries and John B Sanfilippo 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.