Correlation Between Premier Foods and Associated British
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Premier Foods and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Associated British.
Diversification Opportunities for Premier Foods and Associated British
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and Associated is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Premier Foods i.e., Premier Foods and Associated British go up and down completely randomly.
Pair Corralation between Premier Foods and Associated British
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.87 times more return on investment than Associated British. However, Premier Foods PLC is 1.15 times less risky than Associated British. It trades about 0.05 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.12 per unit of risk. If you would invest 18,940 in Premier Foods PLC on August 30, 2024 and sell it today you would earn a total of 220.00 from holding Premier Foods PLC or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. Associated British Foods
Performance |
| Timeline |
| Premier Foods PLC |
| Associated British Foods |
Premier Foods and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Associated British
The main advantage of trading using opposite Premier Foods and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Toyota Motor Corp | Premier Foods vs. MOL Hungarian Oil |
| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Toyota Motor Corp | Associated British vs. MOL Hungarian Oil |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |