Correlation Between Comcast and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Comcast and Premier Foods 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 Comcast and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comcast and Premier Foods PLC, you can compare the effects of market volatilities on Comcast and Premier Foods 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 Comcast with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comcast and Premier Foods.
Diversification Opportunities for Comcast and Premier Foods
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Comcast and Premier is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Comcast and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and Comcast 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 Comcast are associated (or correlated) with Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Comcast i.e., Comcast and Premier Foods go up and down completely randomly.
Pair Corralation between Comcast and Premier Foods
Assuming the 90 days trading horizon Comcast is expected to generate 2.1 times less return on investment than Premier Foods. In addition to that, Comcast is 1.04 times more volatile than Premier Foods PLC. It trades about 0.04 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.09 per unit of volatility. If you would invest 119.00 in Premier Foods PLC on September 4, 2024 and sell it today you would earn a total of 109.00 from holding Premier Foods PLC or generate 91.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Comcast vs. Premier Foods PLC
Performance |
| Timeline |
| Comcast |
| Premier Foods PLC |
Comcast and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comcast and Premier Foods
The main advantage of trading using opposite Comcast and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comcast position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Comcast vs. TERADATA | Comcast vs. Data3 Limited | Comcast vs. PRECISION DRILLING P | Comcast vs. Datang International Power |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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