Correlation Between Collins Foods and Performance Food
Can any of the company-specific risk be diversified away by investing in both Collins Foods 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 Collins Foods and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods Limited and Performance Food Group, you can compare the effects of market volatilities on Collins Foods 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 Collins Foods with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Performance Food.
Diversification Opportunities for Collins Foods and Performance Food
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Performance is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Collins Foods 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 Collins Foods Limited 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 Collins Foods i.e., Collins Foods and Performance Food go up and down completely randomly.
Pair Corralation between Collins Foods and Performance Food
Assuming the 90 days horizon Collins Foods Limited is expected to under-perform the Performance Food. In addition to that, Collins Foods is 1.36 times more volatile than Performance Food Group. It trades about -0.03 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.09 per unit of volatility. If you would invest 6,000 in Performance Food Group on September 2, 2024 and sell it today you would earn a total of 2,250 from holding Performance Food Group or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods Limited vs. Performance Food Group
Performance |
| Timeline |
| Collins Foods Limited |
| Performance Food |
Collins Foods and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Performance Food
The main advantage of trading using opposite Collins Foods and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods 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.| Collins Foods vs. Highlight Communications AG | Collins Foods vs. PRECISION DRILLING P | Collins Foods vs. International Consolidated Airlines | Collins Foods vs. Southwest Airlines Co |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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