Correlation Between Performance Food and WESTERN PER

Can any of the company-specific risk be diversified away by investing in both Performance Food and WESTERN PER 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 WESTERN PER 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 WESTERN PER, you can compare the effects of market volatilities on Performance Food and WESTERN PER 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 WESTERN PER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and WESTERN PER.

Diversification Opportunities for Performance Food and WESTERN PER

-0.31

Correlation Coefficient

Performance Food  WESTERN PER

Very good diversification

The 3 months correlation between Performance and WESTERN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and WESTERN PER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN PER 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 WESTERN PER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN PER has no effect on the direction of Performance Food i.e., Performance Food and WESTERN PER go up and down completely randomly.

Pair Corralation between Performance Food and WESTERN PER

Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.45 times more return on investment than WESTERN PER. However, Performance Food Group is 2.24 times less risky than WESTERN PER. It trades about 0.26 of its potential returns per unit of risk. WESTERN PER is currently generating about -0.06 per unit of risk. If you would invest  8,150  in Performance Food Group on October 25, 2024 and sell it today you would earn a total of  300.00  from holding Performance Food Group or generate 3.68% return on investment over 90 days.

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

Performance Food Group  vs.  WESTERN PER

Performance Food

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

WESTERN PER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN PER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Performance Food and WESTERN PER

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

The idea behind Performance Food Group and WESTERN PER 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.