Correlation Between Premier Foods and AJ Bell
Can any of the company-specific risk be diversified away by investing in both Premier Foods and AJ Bell 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 AJ Bell 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 AJ Bell plc, you can compare the effects of market volatilities on Premier Foods and AJ Bell 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 AJ Bell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and AJ Bell.
Diversification Opportunities for Premier Foods and AJ Bell
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Premier and AJB is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and AJ Bell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Bell plc 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 AJ Bell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Bell plc has no effect on the direction of Premier Foods i.e., Premier Foods and AJ Bell go up and down completely randomly.
Pair Corralation between Premier Foods and AJ Bell
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.81 times more return on investment than AJ Bell. However, Premier Foods PLC is 1.24 times less risky than AJ Bell. It trades about -0.01 of its potential returns per unit of risk. AJ Bell plc is currently generating about -0.2 per unit of risk. If you would invest 18,500 in Premier Foods PLC on November 29, 2024 and sell it today you would lose (40.00) from holding Premier Foods PLC or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. AJ Bell plc
Performance |
| Timeline |
| Premier Foods PLC |
| AJ Bell plc |
Premier Foods and AJ Bell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and AJ Bell
The main advantage of trading using opposite Premier Foods and AJ Bell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, AJ Bell 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 AJ Bell will offset losses from the drop in AJ Bell's long position.| Premier Foods vs. Porvair plc | Premier Foods vs. Alfa Financial Software | Premier Foods vs. Bytes Technology | Premier Foods vs. Tata Steel Limited |
| AJ Bell vs. Cembra Money Bank | AJ Bell vs. Zurich Insurance Group | AJ Bell vs. Nordea Bank Abp | AJ Bell vs. Check Point Software |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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