Correlation Between PREMIER FOODS and PLAYMATES TOYS
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS and PLAYMATES TOYS 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 PREMIER FOODS and PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and PLAYMATES TOYS, you can compare the effects of market volatilities on PREMIER FOODS and PLAYMATES TOYS 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 PREMIER FOODS with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and PLAYMATES TOYS.
Diversification Opportunities for PREMIER FOODS and PLAYMATES TOYS
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between PREMIER and PLAYMATES is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and PREMIER FOODS 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 PREMIER FOODS are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and PLAYMATES TOYS go up and down completely randomly.
Pair Corralation between PREMIER FOODS and PLAYMATES TOYS
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.41 times more return on investment than PLAYMATES TOYS. However, PREMIER FOODS is 2.45 times less risky than PLAYMATES TOYS. It trades about 0.07 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about -0.01 per unit of risk. If you would invest 226.00 in PREMIER FOODS on November 8, 2024 and sell it today you would earn a total of 6.00 from holding PREMIER FOODS or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PREMIER FOODS vs. PLAYMATES TOYS
Performance |
| Timeline |
| PREMIER FOODS |
| PLAYMATES TOYS |
PREMIER FOODS and PLAYMATES TOYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and PLAYMATES TOYS
The main advantage of trading using opposite PREMIER FOODS and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.| PREMIER FOODS vs. Singapore Telecommunications Limited | PREMIER FOODS vs. MAVEN WIRELESS SWEDEN | PREMIER FOODS vs. Ribbon Communications | PREMIER FOODS vs. Zoom Video Communications |
| PLAYMATES TOYS vs. Sumitomo Mitsui Construction | PLAYMATES TOYS vs. AEON METALS LTD | PLAYMATES TOYS vs. ADRIATIC METALS LS 013355 | PLAYMATES TOYS vs. Titan Machinery |
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 CEOs Directory module to screen CEOs from public companies around the world.
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