Correlation Between Apple and Performance Food
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Performance Food Group, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Performance Food.
Diversification Opportunities for Apple and Performance Food
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and Performance is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Apple 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 Apple Inc 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 Apple i.e., Apple and Performance Food go up and down completely randomly.
Pair Corralation between Apple and Performance Food
Assuming the 90 days trading horizon Apple is expected to generate 1.85 times less return on investment than Performance Food. But when comparing it to its historical volatility, Apple Inc is 1.18 times less risky than Performance Food. It trades about 0.18 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 7,000 in Performance Food Group on August 28, 2024 and sell it today you would earn a total of 1,350 from holding Performance Food Group or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Performance Food Group
Performance |
| Timeline |
| Apple Inc |
| Performance Food |
Apple and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Performance Food
The main advantage of trading using opposite Apple and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Public Storage | Apple vs. KENEDIX OFFICE INV | Apple vs. DOCDATA | Apple vs. Information Services International Dentsu |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |