Correlation Between Performance Food and HP
Can any of the company-specific risk be diversified away by investing in both Performance Food and HP 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 HP 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 HP Inc, you can compare the effects of market volatilities on Performance Food and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and HP.
Diversification Opportunities for Performance Food and HP
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Performance and HP is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Performance Food i.e., Performance Food and HP go up and down completely randomly.
Pair Corralation between Performance Food and HP
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.76 times more return on investment than HP. However, Performance Food Group is 1.32 times less risky than HP. It trades about 0.06 of its potential returns per unit of risk. HP Inc is currently generating about 0.03 per unit of risk. If you would invest 5,400 in Performance Food Group on November 19, 2024 and sell it today you would earn a total of 2,950 from holding Performance Food Group or generate 54.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. HP Inc
Performance |
| Timeline |
| Performance Food |
| HP Inc |
Performance Food and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and HP
The main advantage of trading using opposite Performance Food and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.| Performance Food vs. Medical Properties Trust | Performance Food vs. CompuGroup Medical SE | Performance Food vs. KOBE STEEL LTD | Performance Food vs. United States Steel |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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