Correlation Between WH Group and Premier Foods
Can any of the company-specific risk be diversified away by investing in both WH Group 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 WH Group and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WH Group Limited and Premier Foods Plc, you can compare the effects of market volatilities on WH Group 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 WH Group with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and Premier Foods.
Diversification Opportunities for WH Group and Premier Foods
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WHGRF and Premier is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited 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 WH Group 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 WH Group Limited 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 WH Group i.e., WH Group and Premier Foods go up and down completely randomly.
Pair Corralation between WH Group and Premier Foods
Assuming the 90 days horizon WH Group Limited is expected to generate 23.43 times more return on investment than Premier Foods. However, WH Group is 23.43 times more volatile than Premier Foods Plc. It trades about 0.17 of its potential returns per unit of risk. Premier Foods Plc is currently generating about 0.08 per unit of risk. If you would invest 59.00 in WH Group Limited on August 28, 2024 and sell it today you would earn a total of 20.00 from holding WH Group Limited or generate 33.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.86% |
| Values | Daily Returns |
WH Group Limited vs. Premier Foods Plc
Performance |
| Timeline |
| WH Group Limited |
| Premier Foods Plc |
WH Group and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and Premier Foods
The main advantage of trading using opposite WH Group and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group 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.| WH Group vs. Premier Foods Plc | WH Group vs. Torque Lifestyle Brands | WH Group vs. Naturally Splendid Enterprises | WH Group vs. Aryzta AG PK |
| Premier Foods vs. Torque Lifestyle Brands | Premier Foods vs. Naturally Splendid Enterprises | Premier Foods vs. Aryzta AG PK | Premier Foods vs. The A2 Milk |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |