Correlation Between Performance Food and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Performance Food and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines Limited, you can compare the effects of market volatilities on Performance Food and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Singapore Airlines.
Diversification Opportunities for Performance Food and Singapore Airlines
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Performance and Singapore is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Performance Food i.e., Performance Food and Singapore Airlines go up and down completely randomly.
Pair Corralation between Performance Food and Singapore Airlines
Assuming the 90 days trading horizon Performance Food Group is expected to generate 1.25 times more return on investment than Singapore Airlines. However, Performance Food is 1.25 times more volatile than Singapore Airlines Limited. It trades about 0.02 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.02 per unit of risk. If you would invest 8,350 in Performance Food Group on October 26, 2024 and sell it today you would earn a total of 50.00 from holding Performance Food Group or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Singapore Airlines Limited
Performance |
| Timeline |
| Performance Food |
| Singapore Airlines |
Performance Food and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Singapore Airlines
The main advantage of trading using opposite Performance Food and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| Performance Food vs. OPKO HEALTH | Performance Food vs. US Physical Therapy | Performance Food vs. Highlight Communications AG | Performance Food vs. Phibro Animal Health |
| Singapore Airlines vs. Delta Air Lines | Singapore Airlines vs. Air China Limited | Singapore Airlines vs. AIR CHINA LTD | Singapore Airlines vs. RYANAIR HLDGS ADR |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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