Correlation Between Premier Foods and Flowers Foods
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Flowers 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 Flowers 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 Flowers Foods, you can compare the effects of market volatilities on Premier Foods and Flowers 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 Flowers Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Flowers Foods.
Diversification Opportunities for Premier Foods and Flowers Foods
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and Flowers is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers 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 Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of Premier Foods i.e., Premier Foods and Flowers Foods go up and down completely randomly.
Pair Corralation between Premier Foods and Flowers Foods
Assuming the 90 days horizon Premier Foods Plc is expected to under-perform the Flowers Foods. But the pink sheet apears to be less risky and, when comparing its historical volatility, Premier Foods Plc is 1.78 times less risky than Flowers Foods. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Flowers Foods is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,140 in Flowers Foods on September 14, 2024 and sell it today you would lose (17.00) from holding Flowers Foods or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods Plc vs. Flowers Foods
Performance |
| Timeline |
| Premier Foods Plc |
| Flowers Foods |
Premier Foods and Flowers Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Flowers Foods
The main advantage of trading using opposite Premier Foods and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Flowers 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.| Premier Foods vs. BRF SA ADR | Premier Foods vs. Pilgrims Pride Corp | Premier Foods vs. John B Sanfilippo | Premier Foods vs. Seneca Foods Corp |
| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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