Correlation Between Performance Food and HF FOODS

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

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

Diversification Opportunities for Performance Food and HF FOODS

0.05

Correlation Coefficient

Performance Food  HF FOODS

Significant diversification

The 3 months correlation between Performance and 3GX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP and Performance Food 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 Performance Food Group are associated (or correlated) with HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of Performance Food i.e., Performance Food and HF FOODS go up and down completely randomly.

Pair Corralation between Performance Food and HF FOODS

Assuming the 90 days horizon Performance Food Group is expected to under-perform the HF FOODS. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 3.56 times less risky than HF FOODS. The stock trades about -0.1 of its potential returns per unit of risk. The HF FOODS GRP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  302.00  in HF FOODS GRP on December 30, 2024 and sell it today you would earn a total of  70.00  from holding HF FOODS GRP or generate 23.18% return on investment over 90 days.

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

Performance Food Group  vs.  HF FOODS GRP

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HF FOODS GRP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HF FOODS GRP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, HF FOODS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Performance Food and HF FOODS

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

The idea behind Performance Food Group and HF FOODS GRP 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..