Correlation Between PREMIER FOODS and Adobe

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

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

Diversification Opportunities for PREMIER FOODS and Adobe

0.59

Correlation Coefficient

PREMIER FOODS  Adobe

Very weak diversification

The 3 months correlation between PREMIER and Adobe is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and PREMIER 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 PREMIER FOODS are associated (or correlated) with Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and Adobe go up and down completely randomly.

Pair Corralation between PREMIER FOODS and Adobe

Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 0.69 times more return on investment than Adobe. However, PREMIER FOODS is 1.46 times less risky than Adobe. It trades about -0.07 of its potential returns per unit of risk. Adobe Inc is currently generating about -0.19 per unit of risk. If you would invest  226.00  in PREMIER FOODS on December 10, 2024 and sell it today you would lose (14.00) from holding PREMIER FOODS or give up 6.19% of portfolio value over 90 days.

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

PREMIER FOODS  vs.  Adobe Inc

PREMIER FOODS

Risk-Adjusted Performance

Very Weak

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

Adobe Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adobe Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PREMIER FOODS and Adobe

The main advantage of trading using opposite PREMIER FOODS and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS position performs unexpectedly, Adobe 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 Adobe will offset losses from the drop in Adobe's long position.

The idea behind PREMIER FOODS and Adobe Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.