Correlation Between PREMIER FOODS and STRAX AB
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS and STRAX AB 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 STRAX AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and STRAX AB SK, you can compare the effects of market volatilities on PREMIER FOODS and STRAX AB 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 STRAX AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and STRAX AB.
Diversification Opportunities for PREMIER FOODS and STRAX AB
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PREMIER and STRAX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and STRAX AB SK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAX AB SK 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 STRAX AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAX AB SK has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and STRAX AB go up and down completely randomly.
Pair Corralation between PREMIER FOODS and STRAX AB
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.28 times more return on investment than STRAX AB. However, PREMIER FOODS is 3.53 times less risky than STRAX AB. It trades about -0.14 of its potential returns per unit of risk. STRAX AB SK is currently generating about -0.23 per unit of risk. If you would invest 228.00 in PREMIER FOODS on October 24, 2024 and sell it today you would lose (10.00) from holding PREMIER FOODS or give up 4.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. STRAX AB SK
Performance |
| Timeline |
| PREMIER FOODS |
| STRAX AB SK |
PREMIER FOODS and STRAX AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and STRAX AB
The main advantage of trading using opposite PREMIER FOODS and STRAX AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, STRAX AB 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 STRAX AB will offset losses from the drop in STRAX AB's long position.| PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc |
| STRAX AB vs. TYSON FOODS A | STRAX AB vs. Mitsui Chemicals | STRAX AB vs. US FOODS HOLDING | STRAX AB vs. KINGBOARD CHEMICAL |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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