Correlation Between Hitachi Construction and Performance Food
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction 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 Hitachi Construction and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Construction Machinery and Performance Food Group, you can compare the effects of market volatilities on Hitachi Construction 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 Hitachi Construction with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Performance Food.
Diversification Opportunities for Hitachi Construction and Performance Food
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hitachi and Performance is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Hitachi Construction 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 Hitachi Construction Machinery 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 Hitachi Construction i.e., Hitachi Construction and Performance Food go up and down completely randomly.
Pair Corralation between Hitachi Construction and Performance Food
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 1.85 times more return on investment than Performance Food. However, Hitachi Construction is 1.85 times more volatile than Performance Food Group. It trades about 0.24 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.32 per unit of risk. If you would invest 2,080 in Hitachi Construction Machinery on November 7, 2024 and sell it today you would earn a total of 180.00 from holding Hitachi Construction Machinery or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. Performance Food Group
Performance |
| Timeline |
| Hitachi Construction |
| Performance Food |
Hitachi Construction and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Performance Food
The main advantage of trading using opposite Hitachi Construction and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction 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.| Hitachi Construction vs. VULCAN MATERIALS | Hitachi Construction vs. New Residential Investment | Hitachi Construction vs. NEWELL RUBBERMAID | Hitachi Construction vs. Goodyear Tire Rubber |
| Performance Food vs. CODERE ONLINE LUX | Performance Food vs. BOS BETTER ONLINE | Performance Food vs. BRIT AMER TOBACCO | Performance Food vs. Xinhua Winshare Publishing |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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