Correlation Between CONAGRA FOODS and Performance Food

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

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

Diversification Opportunities for CONAGRA FOODS and Performance Food

-0.52

Correlation Coefficient

CONAGRA FOODS  Performance Food

Excellent diversification

The 3 months correlation between CONAGRA and Performance is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA FOODS and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and CONAGRA FOODS 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 CONAGRA FOODS 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 CONAGRA FOODS i.e., CONAGRA FOODS and Performance Food go up and down completely randomly.

Pair Corralation between CONAGRA FOODS and Performance Food

Assuming the 90 days trading horizon CONAGRA FOODS is expected to generate 1.27 times more return on investment than Performance Food. However, CONAGRA FOODS is 1.27 times more volatile than Performance Food Group. It trades about 0.18 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.22 per unit of risk. If you would invest  2,600  in CONAGRA FOODS on October 5, 2024 and sell it today you would earn a total of  95.00  from holding CONAGRA FOODS or generate 3.65% return on investment over 90 days.

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

CONAGRA FOODS  vs.  Performance Food Group

CONAGRA FOODS

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CONAGRA FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CONAGRA FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 CONAGRA FOODS and Performance Food

The main advantage of trading using opposite CONAGRA FOODS and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONAGRA FOODS 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 CONAGRA FOODS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.