Correlation Between Performance Food and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both Performance Food and Inspire Medical 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 Inspire Medical 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 Inspire Medical Systems, you can compare the effects of market volatilities on Performance Food and Inspire Medical 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 Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Inspire Medical.
Diversification Opportunities for Performance Food and Inspire Medical
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Performance and Inspire is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems 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 Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Performance Food i.e., Performance Food and Inspire Medical go up and down completely randomly.
Pair Corralation between Performance Food and Inspire Medical
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.4 times more return on investment than Inspire Medical. However, Performance Food Group is 2.5 times less risky than Inspire Medical. It trades about 0.08 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about -0.01 per unit of risk. If you would invest 5,450 in Performance Food Group on November 1, 2024 and sell it today you would earn a total of 3,200 from holding Performance Food Group or generate 58.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Inspire Medical Systems
Performance |
| Timeline |
| Performance Food |
| Inspire Medical Systems |
Performance Food and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Inspire Medical
The main advantage of trading using opposite Performance Food and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| Inspire Medical vs. MOLSON RS BEVERAGE | Inspire Medical vs. TELECOM ITALIA | Inspire Medical vs. BOSTON BEER A | Inspire Medical vs. Chunghwa Telecom Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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