Correlation Between Performance Food and Hisense Home
Can any of the company-specific risk be diversified away by investing in both Performance Food and Hisense Home 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 Hisense Home 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 Hisense Home Appliances, you can compare the effects of market volatilities on Performance Food and Hisense Home 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 Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Hisense Home.
Diversification Opportunities for Performance Food and Hisense Home
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Performance and Hisense is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances 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 Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of Performance Food i.e., Performance Food and Hisense Home go up and down completely randomly.
Pair Corralation between Performance Food and Hisense Home
Assuming the 90 days trading horizon Performance Food is expected to generate 7.86 times less return on investment than Hisense Home. But when comparing it to its historical volatility, Performance Food Group is 2.93 times less risky than Hisense Home. It trades about 0.08 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 263.00 in Hisense Home Appliances on October 30, 2024 and sell it today you would earn a total of 69.00 from holding Hisense Home Appliances or generate 26.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Hisense Home Appliances
Performance |
| Timeline |
| Performance Food |
| Hisense Home Appliances |
Performance Food and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Hisense Home
The main advantage of trading using opposite Performance Food and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.| Performance Food vs. Titan Machinery | Performance Food vs. Hitachi Construction Machinery | Performance Food vs. Tokyu Construction Co | Performance Food vs. CAIRN HOMES EO |
| Hisense Home vs. URBAN OUTFITTERS | Hisense Home vs. CyberArk Software | Hisense Home vs. UPDATE SOFTWARE | Hisense Home vs. Beta Systems Software |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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