Correlation Between Associated British and Performance Food
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Performance Food Group, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Performance Food.
Diversification Opportunities for Associated British and Performance Food
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and Performance is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Performance Food go up and down completely randomly.
Pair Corralation between Associated British and Performance Food
Assuming the 90 days trading horizon Associated British is expected to generate 11.68 times less return on investment than Performance Food. But when comparing it to its historical volatility, Associated British Foods is 1.05 times less risky than Performance Food. It trades about 0.02 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7,800 in Performance Food Group on September 20, 2024 and sell it today you would earn a total of 400.00 from holding Performance Food Group or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Performance Food Group
Performance |
| Timeline |
| Associated British Foods |
| Performance Food |
Associated British and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Performance Food
The main advantage of trading using opposite Associated British and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. CyberArk Software | Associated British vs. EHEALTH | Associated British vs. YOOMA WELLNESS INC | Associated British vs. ATRYS HEALTH SA |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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