Correlation Between Performance Food and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Performance Food and CHINA EDUCATION 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 CHINA EDUCATION 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 CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Performance Food and CHINA EDUCATION 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 CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and CHINA EDUCATION.
Diversification Opportunities for Performance Food and CHINA EDUCATION
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Performance and CHINA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP 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 CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Performance Food i.e., Performance Food and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Performance Food and CHINA EDUCATION
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.33 times more return on investment than CHINA EDUCATION. However, Performance Food Group is 3.02 times less risky than CHINA EDUCATION. It trades about 0.13 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.04 per unit of risk. If you would invest 6,350 in Performance Food Group on August 31, 2024 and sell it today you would earn a total of 1,950 from holding Performance Food Group or generate 30.71% 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. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Performance Food |
| CHINA EDUCATION GROUP |
Performance Food and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and CHINA EDUCATION
The main advantage of trading using opposite Performance Food and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |