Correlation Between Edita Food and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Edita Food 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 Edita Food and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Premier Foods PLC, you can compare the effects of market volatilities on Edita Food 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 Edita Food with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Premier Foods.
Diversification Opportunities for Edita Food and Premier Foods
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Edita and Premier is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries 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 Edita Food 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 Edita Food Industries 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 Edita Food i.e., Edita Food and Premier Foods go up and down completely randomly.
Pair Corralation between Edita Food and Premier Foods
Assuming the 90 days trading horizon Edita Food is expected to generate 2.1 times less return on investment than Premier Foods. In addition to that, Edita Food is 2.63 times more volatile than Premier Foods PLC. It trades about 0.02 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.13 per unit of volatility. If you would invest 11,478 in Premier Foods PLC on August 29, 2024 and sell it today you would earn a total of 7,322 from holding Premier Foods PLC or generate 63.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Edita Food Industries vs. Premier Foods PLC
Performance |
| Timeline |
| Edita Food Industries |
| Premier Foods PLC |
Edita Food and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Premier Foods
The main advantage of trading using opposite Edita Food and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food 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.| Edita Food vs. Samsung Electronics Co | Edita Food vs. Samsung Electronics Co | Edita Food vs. Toyota Motor Corp | Edita Food vs. Reliance Industries Ltd |
| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Toyota Motor Corp | Premier Foods vs. MOL Hungarian Oil |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |