Correlation Between Gladstone Investment and Performance Food

Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gladstone Investment and Performance Food Group, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Performance Food.

Diversification Opportunities for Gladstone Investment and Performance Food

0.63

Correlation Coefficient

Gladstone Investment  Performance Food

Poor diversification

The 3 months correlation between Gladstone and Performance is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Performance Food go up and down completely randomly.

Pair Corralation between Gladstone Investment and Performance Food

Assuming the 90 days horizon Gladstone Investment is expected to generate 1.4 times less return on investment than Performance Food. In addition to that, Gladstone Investment is 1.06 times more volatile than Performance Food Group. It trades about 0.07 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.1 per unit of volatility. If you would invest  5,200  in Performance Food Group on October 5, 2024 and sell it today you would earn a total of  2,900  from holding Performance Food Group or generate 55.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gladstone Investment  vs.  Performance Food Group

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Performance Food

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Performance Food unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Investment and Performance Food

The main advantage of trading using opposite Gladstone Investment and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.

The idea behind Gladstone Investment and Performance Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.