Correlation Between Calavo Growers and Performance Food

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

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

Diversification Opportunities for Calavo Growers and Performance Food

-0.01

Correlation Coefficient

Calavo Growers  Performance Food

Good diversification

The 3 months correlation between Calavo and Performance is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Calavo Growers 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 Calavo Growers 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 Calavo Growers i.e., Calavo Growers and Performance Food go up and down completely randomly.

Pair Corralation between Calavo Growers and Performance Food

Given the investment horizon of 90 days Calavo Growers is expected to under-perform the Performance Food. In addition to that, Calavo Growers is 1.9 times more volatile than Performance Food Group. It trades about -0.09 of its total potential returns per unit of risk. Performance Food Group is currently generating about -0.08 per unit of volatility. If you would invest  8,824  in Performance Food Group on November 28, 2024 and sell it today you would lose (539.00) from holding Performance Food Group or give up 6.11% of portfolio value over 90 days.

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

Calavo Growers  vs.  Performance Food Group

Calavo Growers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Calavo Growers and Performance Food

The main advantage of trading using opposite Calavo Growers and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calavo Growers 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 Calavo Growers 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.