Correlation Between Performance Food and Ring Energy
Can any of the company-specific risk be diversified away by investing in both Performance Food and Ring Energy 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 Ring Energy 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 Ring Energy, you can compare the effects of market volatilities on Performance Food and Ring Energy 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 Ring Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Ring Energy.
Diversification Opportunities for Performance Food and Ring Energy
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Performance and Ring is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Ring Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ring Energy 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 Ring Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ring Energy has no effect on the direction of Performance Food i.e., Performance Food and Ring Energy go up and down completely randomly.
Pair Corralation between Performance Food and Ring Energy
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.46 times more return on investment than Ring Energy. However, Performance Food Group is 2.16 times less risky than Ring Energy. It trades about 0.3 of its potential returns per unit of risk. Ring Energy is currently generating about -0.04 per unit of risk. If you would invest 6,600 in Performance Food Group on September 12, 2024 and sell it today you would earn a total of 1,900 from holding Performance Food Group or generate 28.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Performance Food Group vs. Ring Energy
Performance |
| Timeline |
| Performance Food |
| Ring Energy |
Performance Food and Ring Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Ring Energy
The main advantage of trading using opposite Performance Food and Ring Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Ring Energy 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 Ring Energy will offset losses from the drop in Ring Energy's long position.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| Ring Energy vs. CPU SOFTWAREHOUSE | Ring Energy vs. The Yokohama Rubber | Ring Energy vs. EAGLE MATERIALS | Ring Energy vs. Magic Software Enterprises |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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