Correlation Between Premier Foods and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Premier Foods and ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods, you can compare the effects of market volatilities on Premier Foods and ConAgra Foods 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 ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and ConAgra Foods.
Diversification Opportunities for Premier Foods and ConAgra Foods
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premier and ConAgra is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods 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 ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Premier Foods i.e., Premier Foods and ConAgra Foods go up and down completely randomly.
Pair Corralation between Premier Foods and ConAgra Foods
Assuming the 90 days horizon Premier Foods Plc is expected to generate 0.86 times more return on investment than ConAgra Foods. However, Premier Foods Plc is 1.16 times less risky than ConAgra Foods. It trades about -0.22 of its potential returns per unit of risk. ConAgra Foods is currently generating about -0.28 per unit of risk. If you would invest 1,285 in Premier Foods Plc on August 27, 2024 and sell it today you would lose (59.00) from holding Premier Foods Plc or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods Plc vs. ConAgra Foods
Performance |
| Timeline |
| Premier Foods Plc |
| ConAgra Foods |
Premier Foods and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and ConAgra Foods
The main advantage of trading using opposite Premier Foods and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.| Premier Foods vs. Torque Lifestyle Brands | Premier Foods vs. Naturally Splendid Enterprises | Premier Foods vs. Aryzta AG PK | Premier Foods vs. The A2 Milk |
| ConAgra Foods vs. Bellring Brands LLC | ConAgra Foods vs. Ingredion Incorporated | ConAgra Foods vs. Nomad Foods | ConAgra Foods vs. Simply Good Foods |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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