Correlation Between Flowers Foods and Performance Food
Can any of the company-specific risk be diversified away by investing in both Flowers Foods and Performance Food 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 Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Performance Food Group, you can compare the effects of market volatilities on Flowers Foods and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Performance Food.
Diversification Opportunities for Flowers Foods and Performance Food
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Flowers and Performance is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Flowers Foods i.e., Flowers Foods and Performance Food go up and down completely randomly.
Pair Corralation between Flowers Foods and Performance Food
Assuming the 90 days horizon Flowers Foods is expected to under-perform the Performance Food. But the stock apears to be less risky and, when comparing its historical volatility, Flowers Foods is 1.13 times less risky than Performance Food. The stock trades about -0.02 of its potential returns per unit of risk. The Performance Food Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,600 in Performance Food Group on October 23, 2024 and sell it today you would earn a total of 2,800 from holding Performance Food Group or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. Performance Food Group
Performance |
| Timeline |
| Flowers Foods |
| Performance Food |
Flowers Foods and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Performance Food
The main advantage of trading using opposite Flowers Foods and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Flowers Foods vs. Pentair plc | Flowers Foods vs. ALTAIR RES INC | Flowers Foods vs. AOI Electronics Co | Flowers Foods vs. ARROW ELECTRONICS |
| Performance Food vs. Yuexiu Transport Infrastructure | Performance Food vs. Jacquet Metal Service | Performance Food vs. AEON METALS LTD | Performance Food vs. Darden Restaurants |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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