Correlation Between Performance Food and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Performance Food and NorAm Drilling 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 NorAm Drilling 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 NorAm Drilling AS, you can compare the effects of market volatilities on Performance Food and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and NorAm Drilling.
Diversification Opportunities for Performance Food and NorAm Drilling
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Performance and NorAm is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of Performance Food i.e., Performance Food and NorAm Drilling go up and down completely randomly.
Pair Corralation between Performance Food and NorAm Drilling
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.29 times more return on investment than NorAm Drilling. However, Performance Food Group is 3.43 times less risky than NorAm Drilling. It trades about 0.14 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about -0.04 per unit of risk. If you would invest 8,100 in Performance Food Group on September 13, 2024 and sell it today you would earn a total of 350.00 from holding Performance Food Group or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. NorAm Drilling AS
Performance |
| Timeline |
| Performance Food |
| NorAm Drilling AS |
Performance Food and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and NorAm Drilling
The main advantage of trading using opposite Performance Food and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| NorAm Drilling vs. PennantPark Investment | NorAm Drilling vs. Gladstone Investment | NorAm Drilling vs. WisdomTree Investments | NorAm Drilling vs. AOYAMA TRADING |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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