Correlation Between PREMIER FOODS and Microsoft
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Microsoft, you can compare the effects of market volatilities on PREMIER FOODS and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Microsoft.
Diversification Opportunities for PREMIER FOODS and Microsoft
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PREMIER and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and Microsoft go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Microsoft
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.81 times more return on investment than Microsoft. However, PREMIER FOODS is 1.23 times less risky than Microsoft. It trades about -0.01 of its potential returns per unit of risk. Microsoft is currently generating about -0.02 per unit of risk. If you would invest 228.00 in PREMIER FOODS on November 4, 2024 and sell it today you would lose (2.00) from holding PREMIER FOODS or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Microsoft
Performance |
| Timeline |
| PREMIER FOODS |
| Microsoft |
PREMIER FOODS and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Microsoft
The main advantage of trading using opposite PREMIER FOODS and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| PREMIER FOODS vs. Zijin Mining Group | PREMIER FOODS vs. National Retail Properties | PREMIER FOODS vs. De Grey Mining | PREMIER FOODS vs. CARSALESCOM |
| Microsoft vs. ULTRA CLEAN HLDGS | Microsoft vs. INSURANCE AUST GRP | Microsoft vs. HANOVER INSURANCE | Microsoft vs. Safety Insurance Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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