Correlation Between Premier Foods and John B
Can any of the company-specific risk be diversified away by investing in both Premier Foods and John B 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 John B 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 John B Sanfilippo, you can compare the effects of market volatilities on Premier Foods and John B 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 John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and John B.
Diversification Opportunities for Premier Foods and John B
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and John is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo 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 John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of Premier Foods i.e., Premier Foods and John B go up and down completely randomly.
Pair Corralation between Premier Foods and John B
Assuming the 90 days horizon Premier Foods Plc is expected to generate 1.56 times more return on investment than John B. However, Premier Foods is 1.56 times more volatile than John B Sanfilippo. It trades about 0.07 of its potential returns per unit of risk. John B Sanfilippo is currently generating about -0.03 per unit of risk. If you would invest 986.00 in Premier Foods Plc on September 1, 2024 and sell it today you would earn a total of 240.00 from holding Premier Foods Plc or generate 24.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.38% |
| Values | Daily Returns |
Premier Foods Plc vs. John B Sanfilippo
Performance |
| Timeline |
| Premier Foods Plc |
| John B Sanfilippo |
Premier Foods and John B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and John B
The main advantage of trading using opposite Premier Foods and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, John B 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 John B will offset losses from the drop in John B's 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 |
| John B vs. Lancaster Colony | John B vs. Treehouse Foods | John B vs. Seneca Foods Corp | John B vs. Seneca Foods Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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