Correlation Between Premier Foods and Futura Medical
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Futura Medical 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 Futura Medical 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 Futura Medical, you can compare the effects of market volatilities on Premier Foods and Futura Medical 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 Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Futura Medical.
Diversification Opportunities for Premier Foods and Futura Medical
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and Futura is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Premier Foods i.e., Premier Foods and Futura Medical go up and down completely randomly.
Pair Corralation between Premier Foods and Futura Medical
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.09 times more return on investment than Futura Medical. However, Premier Foods PLC is 10.87 times less risky than Futura Medical. It trades about 0.06 of its potential returns per unit of risk. Futura Medical is currently generating about -0.29 per unit of risk. If you would invest 18,220 in Premier Foods PLC on November 28, 2024 and sell it today you would earn a total of 240.00 from holding Premier Foods PLC or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Premier Foods PLC vs. Futura Medical
Performance |
| Timeline |
| Premier Foods PLC |
| Futura Medical |
Premier Foods and Futura Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Futura Medical
The main advantage of trading using opposite Premier Foods and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical'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 |
| Futura Medical vs. Gamma Communications PLC | Futura Medical vs. JLEN Environmental Assets | Futura Medical vs. Iron Mountain | Futura Medical vs. Charter Communications Cl |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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