Correlation Between Premier Foods and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Las Vegas 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 Las Vegas 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 Las Vegas Sands, you can compare the effects of market volatilities on Premier Foods and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Las Vegas.
Diversification Opportunities for Premier Foods and Las Vegas
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Premier and Las is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Premier Foods i.e., Premier Foods and Las Vegas go up and down completely randomly.
Pair Corralation between Premier Foods and Las Vegas
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.8 times more return on investment than Las Vegas. However, Premier Foods PLC is 1.25 times less risky than Las Vegas. It trades about 0.09 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.04 per unit of risk. If you would invest 18,340 in Premier Foods PLC on August 30, 2024 and sell it today you would earn a total of 820.00 from holding Premier Foods PLC or generate 4.47% 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. Las Vegas Sands
Performance |
| Timeline |
| Premier Foods PLC |
| Las Vegas Sands |
Premier Foods and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Las Vegas
The main advantage of trading using opposite Premier Foods and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Hyundai Motor | Premier Foods vs. Toyota Motor Corp |
| Las Vegas vs. X FAB Silicon Foundries | Las Vegas vs. JLEN Environmental Assets | Las Vegas vs. Tyson Foods Cl | Las Vegas vs. Premier Foods PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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