Correlation Between Bunge and Performance Food
Can any of the company-specific risk be diversified away by investing in both Bunge 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 Bunge and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Performance Food Group, you can compare the effects of market volatilities on Bunge 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 Bunge with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Performance Food.
Diversification Opportunities for Bunge and Performance Food
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bunge and Performance is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bunge 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 Bunge 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 Bunge 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 Bunge i.e., Bunge and Performance Food go up and down completely randomly.
Pair Corralation between Bunge and Performance Food
Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Performance Food. But the stock apears to be less risky and, when comparing its historical volatility, Bunge Limited is 1.28 times less risky than Performance Food. The stock trades about -0.02 of its potential returns per unit of risk. The Performance Food Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 8,205 in Performance Food Group on August 28, 2024 and sell it today you would earn a total of 671.00 from holding Performance Food Group or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunge Limited vs. Performance Food Group
Performance |
| Timeline |
| Bunge Limited |
| Performance Food |
Bunge and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunge and Performance Food
The main advantage of trading using opposite Bunge and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge 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 Bunge Limited 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. Sysco | Performance Food vs. The Chefs Warehouse | Performance Food vs. United Natural Foods | Performance Food vs. Calavo Growers |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |