Correlation Between JM Smucker and Akamai Technologies

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Can any of the company-specific risk be diversified away by investing in both JM Smucker and Akamai Technologies 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 JM Smucker and Akamai Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JM Smucker and Akamai Technologies, you can compare the effects of market volatilities on JM Smucker and Akamai Technologies 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 JM Smucker with a short position of Akamai Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM Smucker and Akamai Technologies.

Diversification Opportunities for JM Smucker and Akamai Technologies

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between JM Smucker and Akamai is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JM Smucker and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies and JM Smucker 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 JM Smucker are associated (or correlated) with Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of JM Smucker i.e., JM Smucker and Akamai Technologies go up and down completely randomly.

Pair Corralation between JM Smucker and Akamai Technologies

Considering the 90-day investment horizon JM Smucker is expected to generate 2.33 times less return on investment than Akamai Technologies. But when comparing it to its historical volatility, JM Smucker is 2.05 times less risky than Akamai Technologies. It trades about 0.19 of its potential returns per unit of risk. Akamai Technologies is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  8,541  in Akamai Technologies on September 3, 2022 and sell it today you would earn a total of  838.00  from holding Akamai Technologies or generate 9.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

JM Smucker  vs.  Akamai Technologies

 Performance (%) 
       Timeline  
JM Smucker 
JM Smucker Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JM Smucker are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking indicators, JM Smucker may actually be approaching a critical reversion point that can send shares even higher in January 2023.

JM Smucker Price Channel

Akamai Technologies 
Akamai Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Akamai Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Akamai Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Akamai Price Channel

JM Smucker and Akamai Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JM Smucker and Akamai Technologies

The main advantage of trading using opposite JM Smucker and Akamai Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JM Smucker position performs unexpectedly, Akamai Technologies 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 Akamai Technologies will offset losses from the drop in Akamai Technologies' long position.
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The idea behind JM Smucker and Akamai Technologies 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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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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