Correlation Between XLMedia PLC and Performance Food

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

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

Diversification Opportunities for XLMedia PLC and Performance Food

0.41

Correlation Coefficient

XLMedia PLC  Performance Food

Very weak diversification

The 3 months correlation between XLMedia and Performance is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and Performance Food go up and down completely randomly.

Pair Corralation between XLMedia PLC and Performance Food

Assuming the 90 days horizon XLMedia PLC is expected to generate 3.31 times more return on investment than Performance Food. However, XLMedia PLC is 3.31 times more volatile than Performance Food Group. It trades about 0.11 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.05 per unit of risk. If you would invest  10.00  in XLMedia PLC on December 5, 2024 and sell it today you would earn a total of  2.00  from holding XLMedia PLC or generate 20.0% return on investment over 90 days.

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

XLMedia PLC  vs.  Performance Food Group

XLMedia PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, XLMedia PLC 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

Very Weak

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with XLMedia PLC and Performance Food

The main advantage of trading using opposite XLMedia PLC and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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 XLMedia PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.