Correlation Between Sprouts Farmers and Performance Food
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers and Performance Food 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 Sprouts Farmers and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Performance Food Group, you can compare the effects of market volatilities on Sprouts Farmers and Performance Food 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 Sprouts Farmers with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Performance Food.
Diversification Opportunities for Sprouts Farmers and Performance Food
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sprouts and Performance is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Performance Food go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Performance Food
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 1.32 times more return on investment than Performance Food. However, Sprouts Farmers is 1.32 times more volatile than Performance Food Group. It trades about 0.16 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.06 per unit of risk. If you would invest 3,375 in Sprouts Farmers Market on August 24, 2024 and sell it today you would earn a total of 11,214 from holding Sprouts Farmers Market or generate 332.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Performance Food Group
Performance |
| Timeline |
| Sprouts Farmers Market |
| Performance Food |
Sprouts Farmers and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Performance Food
The main advantage of trading using opposite Sprouts Farmers and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Sprouts Farmers vs. Natural Grocers by | Sprouts Farmers vs. Ingles Markets Incorporated | Sprouts Farmers vs. Ocado Group plc | Sprouts Farmers vs. Weis Markets |
| Performance Food vs. Sysco | Performance Food vs. The Chefs Warehouse | Performance Food vs. United Natural Foods | Performance Food vs. Calavo Growers |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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