Correlation Between Performance Food and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Performance Food and Bunzl Plc 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 Performance Food and Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Bunzl plc, you can compare the effects of market volatilities on Performance Food and Bunzl Plc 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 Performance Food with a short position of Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Bunzl Plc.
Diversification Opportunities for Performance Food and Bunzl Plc
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Performance and Bunzl is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc and Performance Food 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 Performance Food Group are associated (or correlated) with Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Performance Food i.e., Performance Food and Bunzl Plc go up and down completely randomly.
Pair Corralation between Performance Food and Bunzl Plc
Given the investment horizon of 90 days Performance Food Group is expected to generate 1.31 times more return on investment than Bunzl Plc. However, Performance Food is 1.31 times more volatile than Bunzl plc. It trades about 0.09 of its potential returns per unit of risk. Bunzl plc is currently generating about 0.05 per unit of risk. If you would invest 5,541 in Performance Food Group on September 4, 2024 and sell it today you would earn a total of 3,286 from holding Performance Food Group or generate 59.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Bunzl plc
Performance |
| Timeline |
| Performance Food |
| Bunzl plc |
Performance Food and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Bunzl Plc
The main advantage of trading using opposite Performance Food and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Performance Food vs. Sysco | Performance Food vs. The Chefs Warehouse | Performance Food vs. United Natural Foods | Performance Food vs. Calavo Growers |
| Bunzl Plc vs. Associated British Foods | Bunzl Plc vs. Compass Group PLC | Bunzl Plc vs. Ashtead Gro | Bunzl Plc vs. Kerry Group PLC |
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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