Correlation Between Boeing and Performance Food

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

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

Diversification Opportunities for Boeing and Performance Food

0.51

Correlation Coefficient

Boeing  Performance Food

Very weak diversification

The 3 months correlation between Boeing and Performance is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Boeing 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 The Boeing 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 Boeing i.e., Boeing and Performance Food go up and down completely randomly.

Pair Corralation between Boeing and Performance Food

Assuming the 90 days trading horizon The Boeing is expected to generate 1.43 times more return on investment than Performance Food. However, Boeing is 1.43 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 0.16 per unit of risk. If you would invest  14,338  in The Boeing on October 24, 2024 and sell it today you would earn a total of  2,620  from holding The Boeing or generate 18.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

The Boeing  vs.  Performance Food Group

Boeing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Boeing unveiled solid returns over the last few months and may actually be approaching a breakup point.

Performance Food

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boeing and Performance Food

The main advantage of trading using opposite Boeing and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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 The Boeing 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.