Correlation Between PREMIER FOODS and W P

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

By analyzing existing cross correlation between PREMIER FOODS and W P Carey, you can compare the effects of market volatilities on PREMIER FOODS and W P 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 W P. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and W P.

Diversification Opportunities for PREMIER FOODS and W P

-0.11

Correlation Coefficient

PREMIER FOODS  W P

Good diversification

The 3 months correlation between PREMIER and WPY is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey 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 W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and W P go up and down completely randomly.

Pair Corralation between PREMIER FOODS and W P

Assuming the 90 days trading horizon PREMIER FOODS is expected to under-perform the W P. In addition to that, PREMIER FOODS is 1.15 times more volatile than W P Carey. It trades about -0.06 of its total potential returns per unit of risk. W P Carey is currently generating about 0.14 per unit of volatility. If you would invest  5,107  in W P Carey on December 20, 2024 and sell it today you would earn a total of  555.00  from holding W P Carey or generate 10.87% return on investment over 90 days.

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

PREMIER FOODS  vs.  W P Carey

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.

W P Carey

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, W P may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PREMIER FOODS and W P

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

The idea behind PREMIER FOODS and W P Carey 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 CEOs Directory module to screen CEOs from public companies around the world.