Correlation Between State Bank and Premier Foods
Can any of the company-specific risk be diversified away by investing in both State Bank and Premier 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 State Bank and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Premier Foods PLC, you can compare the effects of market volatilities on State Bank and Premier 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 State Bank with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Premier Foods.
Diversification Opportunities for State Bank and Premier Foods
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Premier is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and State Bank 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 State Bank of are associated (or correlated) with Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of State Bank i.e., State Bank and Premier Foods go up and down completely randomly.
Pair Corralation between State Bank and Premier Foods
Assuming the 90 days trading horizon State Bank is expected to generate 1.4 times less return on investment than Premier Foods. In addition to that, State Bank is 1.19 times more volatile than Premier Foods PLC. It trades about 0.05 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.09 per unit of volatility. If you would invest 10,959 in Premier Foods PLC on November 5, 2024 and sell it today you would earn a total of 7,821 from holding Premier Foods PLC or generate 71.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Premier Foods PLC
Performance |
| Timeline |
| State Bank |
| Premier Foods PLC |
State Bank and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Premier Foods
The main advantage of trading using opposite State Bank and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Premier 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| State Bank vs. Bisichi Mining PLC | State Bank vs. Broadcom | State Bank vs. Atalaya Mining | State Bank vs. Fortuna Silver Mines |
| Premier Foods vs. Take Two Interactive Software | Premier Foods vs. TechnipFMC PLC | Premier Foods vs. DXC Technology Co | Premier Foods vs. Vitec Software Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |