Correlation Between PREMIER FOODS and Bank of America
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Verizon Communications, you can compare the effects of market volatilities on PREMIER FOODS and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Bank of America.
Diversification Opportunities for PREMIER FOODS and Bank of America
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PREMIER and Bank is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and Bank of America go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Bank of America
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 1.01 times more return on investment than Bank of America. However, PREMIER FOODS is 1.01 times more volatile than Verizon Communications. It trades about 0.09 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.08 per unit of risk. If you would invest 144.00 in PREMIER FOODS on November 8, 2024 and sell it today you would earn a total of 88.00 from holding PREMIER FOODS or generate 61.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Verizon Communications
Performance |
| Timeline |
| PREMIER FOODS |
| Verizon Communications |
PREMIER FOODS and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Bank of America
The main advantage of trading using opposite PREMIER FOODS and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America'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 |
| Bank of America vs. Sterling Construction | Bank of America vs. Perdoceo Education | Bank of America vs. Dairy Farm International | Bank of America vs. Sqs Software Quality |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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