Correlation Between Flowers Foods and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both Flowers Foods and PREMIER FOODS 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 Flowers Foods and PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and PREMIER FOODS, you can compare the effects of market volatilities on Flowers Foods and PREMIER FOODS 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 Flowers Foods with a short position of PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and PREMIER FOODS.
Diversification Opportunities for Flowers Foods and PREMIER FOODS
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Flowers and PREMIER is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS and Flowers 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 Flowers Foods are associated (or correlated) with PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Flowers Foods i.e., Flowers Foods and PREMIER FOODS go up and down completely randomly.
Pair Corralation between Flowers Foods and PREMIER FOODS
Assuming the 90 days horizon Flowers Foods is expected to generate 4.23 times less return on investment than PREMIER FOODS. But when comparing it to its historical volatility, Flowers Foods is 1.1 times less risky than PREMIER FOODS. It trades about 0.03 of its potential returns per unit of risk. PREMIER FOODS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 197.00 in PREMIER FOODS on September 3, 2024 and sell it today you would earn a total of 37.00 from holding PREMIER FOODS or generate 18.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Flowers Foods vs. PREMIER FOODS
Performance |
Timeline |
Flowers Foods |
PREMIER FOODS |
Flowers Foods and PREMIER FOODS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flowers Foods and PREMIER FOODS
The main advantage of trading using opposite Flowers Foods and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.Flowers Foods vs. Avanos Medical | Flowers Foods vs. DXC Technology Co | Flowers Foods vs. Wayside Technology Group | Flowers Foods vs. SCOTT TECHNOLOGY |
PREMIER FOODS vs. USU Software AG | PREMIER FOODS vs. Mitsubishi Materials | PREMIER FOODS vs. Martin Marietta Materials | PREMIER FOODS vs. Check Point Software |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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