Correlation Between Performance Food and Western Copper
Can any of the company-specific risk be diversified away by investing in both Performance Food and Western Copper 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 Western Copper 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 Western Copper and, you can compare the effects of market volatilities on Performance Food and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Western Copper.
Diversification Opportunities for Performance Food and Western Copper
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Performance and Western is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Performance Food i.e., Performance Food and Western Copper go up and down completely randomly.
Pair Corralation between Performance Food and Western Copper
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.35 times more return on investment than Western Copper. However, Performance Food Group is 2.84 times less risky than Western Copper. It trades about 0.33 of its potential returns per unit of risk. Western Copper and is currently generating about 0.1 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Western Copper and
Performance |
| Timeline |
| Performance Food |
| Western Copper |
Performance Food and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Western Copper
The main advantage of trading using opposite Performance Food and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| Performance Food vs. China BlueChemical | Performance Food vs. AIR PRODCHEMICALS | Performance Food vs. Siamgas And Petrochemicals | Performance Food vs. Sanyo Chemical Industries |
| Western Copper vs. Tower One Wireless | Western Copper vs. Ribbon Communications | Western Copper vs. Mobilezone Holding AG | Western Copper vs. COMBA TELECOM SYST |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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