Correlation Between Premier Foods and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Premier Foods and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Litigation Capital.
Diversification Opportunities for Premier Foods and Litigation Capital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Premier and Litigation is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Premier Foods i.e., Premier Foods and Litigation Capital go up and down completely randomly.
Pair Corralation between Premier Foods and Litigation Capital
Assuming the 90 days trading horizon Premier Foods PLC is expected to under-perform the Litigation Capital. In addition to that, Premier Foods is 1.44 times more volatile than Litigation Capital Management. It trades about -0.04 of its total potential returns per unit of risk. Litigation Capital Management is currently generating about 0.2 per unit of volatility. If you would invest 11,150 in Litigation Capital Management on August 26, 2024 and sell it today you would earn a total of 425.00 from holding Litigation Capital Management or generate 3.81% 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. Litigation Capital Management
Performance |
| Timeline |
| Premier Foods PLC |
| Litigation Capital |
Premier Foods and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Litigation Capital
The main advantage of trading using opposite Premier Foods and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Premier Foods vs. Walmart | Premier Foods vs. BYD Co | Premier Foods vs. Volkswagen AG Non Vtg | Premier Foods vs. Deutsche Post AG |
| Litigation Capital vs. Catalyst Media Group | Litigation Capital vs. Oncimmune Holdings plc | Litigation Capital vs. Invesco Health Care | Litigation Capital vs. Coor Service Management |
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 Stocks Directory module to find actively traded stocks across global markets.
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