Correlation Between Bunzl Plc and Performance Food
Can any of the company-specific risk be diversified away by investing in both Bunzl Plc 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 Bunzl Plc and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl plc and Performance Food Group, you can compare the effects of market volatilities on Bunzl Plc 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 Bunzl Plc with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and Performance Food.
Diversification Opportunities for Bunzl Plc and Performance Food
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bunzl and Performance is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Bunzl Plc 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 Bunzl plc 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 Bunzl Plc i.e., Bunzl Plc and Performance Food go up and down completely randomly.
Pair Corralation between Bunzl Plc and Performance Food
Assuming the 90 days horizon Bunzl Plc is expected to generate 2.09 times less return on investment than Performance Food. But when comparing it to its historical volatility, Bunzl plc is 1.27 times less risky than Performance Food. It trades about 0.04 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,250 in Performance Food Group on November 3, 2024 and sell it today you would earn a total of 1,781 from holding Performance Food Group or generate 24.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunzl plc vs. Performance Food Group
Performance |
| Timeline |
| Bunzl plc |
| Performance Food |
Bunzl Plc and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl Plc and Performance Food
The main advantage of trading using opposite Bunzl Plc and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl Plc 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.| Bunzl Plc vs. Associated British Foods | Bunzl Plc vs. Compass Group PLC | Bunzl Plc vs. Ashtead Gro | Bunzl Plc vs. Kerry Group PLC |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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