Correlation Between HomeToGo and Premier Foods
Can any of the company-specific risk be diversified away by investing in both HomeToGo 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 HomeToGo and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and Premier Foods PLC, you can compare the effects of market volatilities on HomeToGo 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 HomeToGo with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and Premier Foods.
Diversification Opportunities for HomeToGo and Premier Foods
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HomeToGo and Premier is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and HomeToGo 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 HomeToGo SE 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 PLC has no effect on the direction of HomeToGo i.e., HomeToGo and Premier Foods go up and down completely randomly.
Pair Corralation between HomeToGo and Premier Foods
Assuming the 90 days trading horizon HomeToGo SE is expected to under-perform the Premier Foods. In addition to that, HomeToGo is 2.22 times more volatile than Premier Foods PLC. It trades about -0.15 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.06 per unit of volatility. If you would invest 222.00 in Premier Foods PLC on September 15, 2024 and sell it today you would earn a total of 4.00 from holding Premier Foods PLC or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. Premier Foods PLC
Performance |
| Timeline |
| HomeToGo SE |
| Premier Foods PLC |
HomeToGo and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and Premier Foods
The main advantage of trading using opposite HomeToGo and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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' long position.| HomeToGo vs. Tencent Holdings | HomeToGo vs. Superior Plus Corp | HomeToGo vs. SIVERS SEMICONDUCTORS AB | HomeToGo vs. NorAm Drilling AS |
| Premier Foods vs. HomeToGo SE | Premier Foods vs. Sunny Optical Technology | Premier Foods vs. Haier Smart Home | Premier Foods vs. Focus Home Interactive |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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