Correlation Between PARKEN Sport and Performance Food

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

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

Diversification Opportunities for PARKEN Sport and Performance Food

0.72

Correlation Coefficient

PARKEN Sport  Performance Food

Poor diversification

The 3 months correlation between PARKEN and Performance is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and PARKEN Sport 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 PARKEN Sport Entertainment 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 PARKEN Sport i.e., PARKEN Sport and Performance Food go up and down completely randomly.

Pair Corralation between PARKEN Sport and Performance Food

Assuming the 90 days horizon PARKEN Sport is expected to generate 1.34 times less return on investment than Performance Food. In addition to that, PARKEN Sport is 1.84 times more volatile than Performance Food Group. It trades about 0.1 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.24 per unit of volatility. If you would invest  6,800  in Performance Food Group on September 17, 2024 and sell it today you would earn a total of  1,550  from holding Performance Food Group or generate 22.79% return on investment over 90 days.

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

PARKEN Sport Entertainment  vs.  Performance Food Group

PARKEN Sport Enterta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARKEN Sport reported solid returns over the last few months and may actually be approaching a breakup point.

Performance Food

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Performance Food unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PARKEN Sport and Performance Food

The main advantage of trading using opposite PARKEN Sport and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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 PARKEN Sport Entertainment 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.