Correlation Between Premier Foods and Sparebank
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Sparebank 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 Premier Foods and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods PLC and Sparebank 1 SR, you can compare the effects of market volatilities on Premier Foods and Sparebank 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 Premier Foods with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Sparebank.
Diversification Opportunities for Premier Foods and Sparebank
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Premier and Sparebank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Premier Foods 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 Premier Foods PLC are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Premier Foods i.e., Premier Foods and Sparebank go up and down completely randomly.
Pair Corralation between Premier Foods and Sparebank
Assuming the 90 days trading horizon Premier Foods PLC is expected to under-perform the Sparebank. In addition to that, Premier Foods is 1.06 times more volatile than Sparebank 1 SR. It trades about -0.02 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.03 per unit of volatility. If you would invest 14,340 in Sparebank 1 SR on September 13, 2024 and sell it today you would earn a total of 100.00 from holding Sparebank 1 SR or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. Sparebank 1 SR
Performance |
| Timeline |
| Premier Foods PLC |
| Sparebank 1 SR |
Premier Foods and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Sparebank
The main advantage of trading using opposite Premier Foods and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Premier Foods vs. Taylor Maritime Investments | Premier Foods vs. PureTech Health plc | Premier Foods vs. National Beverage Corp | Premier Foods vs. Universal Health Services |
| Sparebank vs. Panther Metals PLC | Sparebank vs. Edita Food Industries | Sparebank vs. Jacquet Metal Service | Sparebank vs. Roebuck Food Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |