Correlation Between Performance Food and Brinker International
Can any of the company-specific risk be diversified away by investing in both Performance Food and Brinker International 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 Brinker International 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 Brinker International, you can compare the effects of market volatilities on Performance Food and Brinker International 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 Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Brinker International.
Diversification Opportunities for Performance Food and Brinker International
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Performance and Brinker is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International 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 Brinker International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinker International has no effect on the direction of Performance Food i.e., Performance Food and Brinker International go up and down completely randomly.
Pair Corralation between Performance Food and Brinker International
Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the Brinker International. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 2.59 times less risky than Brinker International. The stock trades about -0.2 of its potential returns per unit of risk. The Brinker International is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 12,300 in Brinker International on October 12, 2024 and sell it today you would earn a total of 1,200 from holding Brinker International or generate 9.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Brinker International
Performance |
| Timeline |
| Performance Food |
| Brinker International |
Performance Food and Brinker International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Brinker International
The main advantage of trading using opposite Performance Food and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Brinker International 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 Brinker International will offset losses from the drop in Brinker International's long position.| Performance Food vs. YOOMA WELLNESS INC | Performance Food vs. FEMALE HEALTH | Performance Food vs. Applied Materials | Performance Food vs. US Physical Therapy |
| Brinker International vs. COFCO Joycome Foods | Brinker International vs. KENEDIX OFFICE INV | Brinker International vs. Performance Food Group | Brinker International vs. PREMIER FOODS |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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