Correlation Between Performance Food and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Performance Food and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on Performance Food and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Dairy Farm.
Diversification Opportunities for Performance Food and Dairy Farm
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Performance and Dairy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Performance Food i.e., Performance Food and Dairy Farm go up and down completely randomly.
Pair Corralation between Performance Food and Dairy Farm
Assuming the 90 days trading horizon Performance Food is expected to generate 1.26 times less return on investment than Dairy Farm. But when comparing it to its historical volatility, Performance Food Group is 1.03 times less risky than Dairy Farm. It trades about 0.3 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 206.00 in Dairy Farm International on August 29, 2024 and sell it today you would earn a total of 28.00 from holding Dairy Farm International or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Dairy Farm International
Performance |
| Timeline |
| Performance Food |
| Dairy Farm International |
Performance Food and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Dairy Farm
The main advantage of trading using opposite Performance Food and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Performance Food vs. Mitsubishi Materials | Performance Food vs. Eagle Materials | Performance Food vs. Summit Materials | Performance Food vs. Iridium Communications |
| Dairy Farm vs. TESCO PLC LS 0633333 | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm vs. SIVERS SEMICONDUCTORS AB |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |