Correlation Between CN MODERN and Performance Food
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Performance Food 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 CN MODERN and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Performance Food Group, you can compare the effects of market volatilities on CN MODERN and Performance Food 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 CN MODERN with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Performance Food.
Diversification Opportunities for CN MODERN and Performance Food
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 07M and Performance is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of CN MODERN i.e., CN MODERN and Performance Food go up and down completely randomly.
Pair Corralation between CN MODERN and Performance Food
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the Performance Food. In addition to that, CN MODERN is 1.09 times more volatile than Performance Food Group. It trades about -0.19 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.3 per unit of volatility. If you would invest 7,550 in Performance Food Group on August 27, 2024 and sell it today you would earn a total of 800.00 from holding Performance Food Group or generate 10.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Performance Food Group
Performance |
| Timeline |
| CN MODERN DAIRY |
| Performance Food |
CN MODERN and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Performance Food
The main advantage of trading using opposite CN MODERN and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.The idea behind CN MODERN DAIRY and Performance Food Group 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.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
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 the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |