Correlation Between Performance Food and Neinor Homes
Can any of the company-specific risk be diversified away by investing in both Performance Food and Neinor Homes 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 Neinor Homes 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 Neinor Homes SA, you can compare the effects of market volatilities on Performance Food and Neinor Homes 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 Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Neinor Homes.
Diversification Opportunities for Performance Food and Neinor Homes
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Performance and Neinor is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA 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 Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of Performance Food i.e., Performance Food and Neinor Homes go up and down completely randomly.
Pair Corralation between Performance Food and Neinor Homes
Assuming the 90 days trading horizon Performance Food is expected to generate 1.01 times less return on investment than Neinor Homes. But when comparing it to its historical volatility, Performance Food Group is 2.19 times less risky than Neinor Homes. It trades about 0.31 of its potential returns per unit of risk. Neinor Homes SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,581 in Neinor Homes SA on November 4, 2024 and sell it today you would earn a total of 93.00 from holding Neinor Homes SA or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Neinor Homes SA
Performance |
| Timeline |
| Performance Food |
| Neinor Homes SA |
Performance Food and Neinor Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Neinor Homes
The main advantage of trading using opposite Performance Food and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Neinor Homes 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.| Performance Food vs. SOGECLAIR SA INH | Performance Food vs. Corporate Office Properties | Performance Food vs. NORWEGIAN AIR SHUT | Performance Food vs. DELTA AIR LINES |
| Neinor Homes vs. China Communications Services | Neinor Homes vs. Transport International Holdings | Neinor Homes vs. COLUMBIA SPORTSWEAR | Neinor Homes vs. Zoom Video Communications |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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