Correlation Between Performance Food and PF Bakkafrost
Can any of the company-specific risk be diversified away by investing in both Performance Food and PF Bakkafrost 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 Performance Food and PF Bakkafrost into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and PF Bakkafrost, you can compare the effects of market volatilities on Performance Food and PF Bakkafrost 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 Performance Food with a short position of PF Bakkafrost. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and PF Bakkafrost.
Diversification Opportunities for Performance Food and PF Bakkafrost
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Performance and 6BF is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and PF Bakkafrost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PF Bakkafrost and Performance Food 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 Performance Food Group are associated (or correlated) with PF Bakkafrost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PF Bakkafrost has no effect on the direction of Performance Food i.e., Performance Food and PF Bakkafrost go up and down completely randomly.
Pair Corralation between Performance Food and PF Bakkafrost
Assuming the 90 days horizon Performance Food Group is expected to generate 1.71 times more return on investment than PF Bakkafrost. However, Performance Food is 1.71 times more volatile than PF Bakkafrost. It trades about 0.22 of its potential returns per unit of risk. PF Bakkafrost is currently generating about 0.05 per unit of risk. If you would invest 7,400 in Performance Food Group on September 3, 2024 and sell it today you would earn a total of 850.00 from holding Performance Food Group or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. PF Bakkafrost
Performance |
| Timeline |
| Performance Food |
| PF Bakkafrost |
Performance Food and PF Bakkafrost Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and PF Bakkafrost
The main advantage of trading using opposite Performance Food and PF Bakkafrost positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, PF Bakkafrost 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 PF Bakkafrost will offset losses from the drop in PF Bakkafrost's long position.| Performance Food vs. Australian Agricultural | Performance Food vs. Sumitomo Mitsui Construction | Performance Food vs. Iridium Communications | Performance Food vs. Entravision Communications |
| PF Bakkafrost vs. Performance Food Group | PF Bakkafrost vs. Superior Plus Corp | PF Bakkafrost vs. NMI Holdings | PF Bakkafrost vs. Origin Agritech |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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