Correlation Between Fraser and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Fraser 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 Fraser and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fraser and Neave and Premier Foods Plc, you can compare the effects of market volatilities on Fraser 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 Fraser with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fraser and Premier Foods.
Diversification Opportunities for Fraser and Premier Foods
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fraser and Premier is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fraser and Neave 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 Fraser 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 Fraser and Neave 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 Fraser i.e., Fraser and Premier Foods go up and down completely randomly.
Pair Corralation between Fraser and Premier Foods
Assuming the 90 days horizon Fraser and Neave is expected to generate 0.98 times more return on investment than Premier Foods. However, Fraser and Neave is 1.02 times less risky than Premier Foods. It trades about 0.12 of its potential returns per unit of risk. Premier Foods Plc is currently generating about 0.1 per unit of risk. If you would invest 72.00 in Fraser and Neave on September 12, 2024 and sell it today you would earn a total of 40.00 from holding Fraser and Neave or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.34% |
| Values | Daily Returns |
Fraser and Neave vs. Premier Foods Plc
Performance |
| Timeline |
| Fraser and Neave |
| Premier Foods Plc |
Fraser and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fraser and Premier Foods
The main advantage of trading using opposite Fraser and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fraser 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.| Fraser vs. Premier Foods Plc | Fraser vs. Torque Lifestyle Brands | Fraser vs. Naturally Splendid Enterprises | Fraser vs. Aryzta AG PK |
| Premier Foods vs. BRF SA ADR | Premier Foods vs. Pilgrims Pride Corp | Premier Foods vs. John B Sanfilippo | Premier Foods vs. Seneca Foods Corp |
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.
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