Correlation Between Marwyn Value and Premier Foods

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

By analyzing existing cross correlation between Marwyn Value Investors and Premier Foods PLC, you can compare the effects of market volatilities on Marwyn Value and Premier Foods 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 Marwyn Value with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marwyn Value and Premier Foods.

Diversification Opportunities for Marwyn Value and Premier Foods

-0.22

Correlation Coefficient

Marwyn Value  Premier Foods

Very good diversification

The 3 months correlation between Marwyn and Premier is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Marwyn Value Investors and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and Marwyn Value 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 Marwyn Value Investors are associated (or correlated) with Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Marwyn Value i.e., Marwyn Value and Premier Foods go up and down completely randomly.

Pair Corralation between Marwyn Value and Premier Foods

Assuming the 90 days trading horizon Marwyn Value Investors is expected to generate 0.8 times more return on investment than Premier Foods. However, Marwyn Value Investors is 1.25 times less risky than Premier Foods. It trades about 0.32 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.0 per unit of risk. If you would invest  9,016  in Marwyn Value Investors on December 30, 2024 and sell it today you would earn a total of  1,684  from holding Marwyn Value Investors or generate 18.68% return on investment over 90 days.

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

Marwyn Value Investors  vs.  Premier Foods PLC

Marwyn Value Investors

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marwyn Value Investors are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Marwyn Value exhibited solid returns over the last few months and may actually be approaching a breakup point.

Premier Foods PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premier Foods PLC 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Marwyn Value and Premier Foods

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

The idea behind Marwyn Value Investors and Premier Foods PLC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.