Correlation Between Premier Foods and National Atomic
Can any of the company-specific risk be diversified away by investing in both Premier Foods and National Atomic 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 National Atomic 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 National Atomic Co, you can compare the effects of market volatilities on Premier Foods and National Atomic 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 National Atomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and National Atomic.
Diversification Opportunities for Premier Foods and National Atomic
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Premier and National is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and National Atomic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Atomic 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 National Atomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Atomic has no effect on the direction of Premier Foods i.e., Premier Foods and National Atomic go up and down completely randomly.
Pair Corralation between Premier Foods and National Atomic
Assuming the 90 days trading horizon Premier Foods is expected to generate 1.3 times less return on investment than National Atomic. But when comparing it to its historical volatility, Premier Foods PLC is 1.62 times less risky than National Atomic. It trades about 0.12 of its potential returns per unit of risk. National Atomic Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,635 in National Atomic Co on September 3, 2024 and sell it today you would earn a total of 410.00 from holding National Atomic Co or generate 11.28% 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. National Atomic Co
Performance |
| Timeline |
| Premier Foods PLC |
| National Atomic |
Premier Foods and National Atomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and National Atomic
The main advantage of trading using opposite Premier Foods and National Atomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, National Atomic 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 National Atomic will offset losses from the drop in National Atomic's long position.| Premier Foods vs. National Atomic Co | Premier Foods vs. Flutter Entertainment PLC | Premier Foods vs. Camellia Plc | Premier Foods vs. Marwyn Value Investors |
| National Atomic vs. Fevertree Drinks Plc | National Atomic vs. Supermarket Income REIT | National Atomic vs. Beazer Homes USA | National Atomic vs. Ecclesiastical Insurance Office |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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