Correlation Between Performance Food and SPS Commerce
Can any of the company-specific risk be diversified away by investing in both Performance Food and SPS Commerce 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 SPS Commerce 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 SPS Commerce, you can compare the effects of market volatilities on Performance Food and SPS Commerce 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 SPS Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and SPS Commerce.
Diversification Opportunities for Performance Food and SPS Commerce
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Performance and SPS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and SPS Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPS Commerce 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 SPS Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPS Commerce has no effect on the direction of Performance Food i.e., Performance Food and SPS Commerce go up and down completely randomly.
Pair Corralation between Performance Food and SPS Commerce
Assuming the 90 days trading horizon Performance Food is expected to generate 1.04 times less return on investment than SPS Commerce. But when comparing it to its historical volatility, Performance Food Group is 2.04 times less risky than SPS Commerce. It trades about 0.26 of its potential returns per unit of risk. SPS Commerce is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 18,000 in SPS Commerce on October 25, 2024 and sell it today you would earn a total of 700.00 from holding SPS Commerce or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Performance Food Group vs. SPS Commerce
Performance |
| Timeline |
| Performance Food |
| SPS Commerce |
Performance Food and SPS Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and SPS Commerce
The main advantage of trading using opposite Performance Food and SPS Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, SPS Commerce 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 SPS Commerce will offset losses from the drop in SPS Commerce's long position.| Performance Food vs. Meiko Electronics Co | Performance Food vs. HYATT HOTELS A | Performance Food vs. PPHE HOTEL GROUP | Performance Food vs. NH HOTEL GROUP |
| SPS Commerce vs. GWILLI FOOD | SPS Commerce vs. Performance Food Group | SPS Commerce vs. COFCO Joycome Foods | SPS Commerce vs. INDOFOOD AGRI RES |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |