Correlation Between PREMIER FOODS and Stora Enso
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS and Stora Enso 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 Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Stora Enso Oyj, you can compare the effects of market volatilities on PREMIER FOODS and Stora Enso 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 Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Stora Enso.
Diversification Opportunities for PREMIER FOODS and Stora Enso
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PREMIER and Stora is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and Stora Enso go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Stora Enso
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.7 times more return on investment than Stora Enso. However, PREMIER FOODS is 1.42 times less risky than Stora Enso. It trades about 0.1 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.02 per unit of risk. If you would invest 121.00 in PREMIER FOODS on September 5, 2024 and sell it today you would earn a total of 115.00 from holding PREMIER FOODS or generate 95.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Stora Enso Oyj
Performance |
| Timeline |
| PREMIER FOODS |
| Stora Enso Oyj |
PREMIER FOODS and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Stora Enso
The main advantage of trading using opposite PREMIER FOODS and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| PREMIER FOODS vs. TOTAL GABON | PREMIER FOODS vs. Walgreens Boots Alliance | PREMIER FOODS vs. Peak Resources Limited |
| Stora Enso vs. United Natural Foods | Stora Enso vs. EBRO FOODS | Stora Enso vs. ScanSource | Stora Enso vs. PREMIER FOODS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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