Correlation Between Performance Food and NORW CRS
Can any of the company-specific risk be diversified away by investing in both Performance Food and NORW CRS 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 NORW CRS 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 NORW CRS LINE, you can compare the effects of market volatilities on Performance Food and NORW CRS 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 NORW CRS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and NORW CRS.
Diversification Opportunities for Performance Food and NORW CRS
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Performance and NORW is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and NORW CRS LINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORW CRS LINE 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 NORW CRS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORW CRS LINE has no effect on the direction of Performance Food i.e., Performance Food and NORW CRS go up and down completely randomly.
Pair Corralation between Performance Food and NORW CRS
Assuming the 90 days trading horizon Performance Food is expected to generate 1.45 times less return on investment than NORW CRS. But when comparing it to its historical volatility, Performance Food Group is 2.05 times less risky than NORW CRS. It trades about 0.24 of its potential returns per unit of risk. NORW CRS LINE is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,141 in NORW CRS LINE on September 13, 2024 and sell it today you would earn a total of 461.00 from holding NORW CRS LINE or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Performance Food Group vs. NORW CRS LINE
Performance |
| Timeline |
| Performance Food |
| NORW CRS LINE |
Performance Food and NORW CRS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and NORW CRS
The main advantage of trading using opposite Performance Food and NORW CRS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, NORW CRS 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 NORW CRS will offset losses from the drop in NORW CRS's long position.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| NORW CRS vs. REINET INVESTMENTS SCA | NORW CRS vs. Computer And Technologies | NORW CRS vs. Gladstone Investment | NORW CRS vs. MACOM Technology Solutions |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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