Correlation Between Applied Materials and Performance Food
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Performance Food Group, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Performance Food.
Diversification Opportunities for Applied Materials and Performance Food
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and Performance is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and Performance Food go up and down completely randomly.
Pair Corralation between Applied Materials and Performance Food
Assuming the 90 days horizon Applied Materials is expected to under-perform the Performance Food. In addition to that, Applied Materials is 2.11 times more volatile than Performance Food Group. It trades about -0.02 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.02 per unit of volatility. If you would invest 8,150 in Performance Food Group on October 12, 2024 and sell it today you would earn a total of 50.00 from holding Performance Food Group or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Applied Materials vs. Performance Food Group
Performance |
| Timeline |
| Applied Materials |
| Performance Food |
Applied Materials and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Performance Food
The main advantage of trading using opposite Applied Materials and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. Magic Software Enterprises | Applied Materials vs. WILLIS LEASE FIN | Applied Materials vs. ALBIS LEASING AG | Applied Materials vs. LOANDEPOT INC A |
| Performance Food vs. YOOMA WELLNESS INC | Performance Food vs. FEMALE HEALTH | Performance Food vs. Applied Materials | Performance Food vs. US Physical Therapy |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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