Correlation Between Performance Food and CONAGRA FOODS

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

Diversification Opportunities for Performance Food and CONAGRA FOODS

-0.52

Correlation Coefficient

Performance Food  CONAGRA FOODS

Excellent diversification

The 3 months correlation between Performance and CONAGRA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and CONAGRA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA FOODS 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 CONAGRA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA FOODS has no effect on the direction of Performance Food i.e., Performance Food and CONAGRA FOODS go up and down completely randomly.

Pair Corralation between Performance Food and CONAGRA FOODS

Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the CONAGRA FOODS. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 1.27 times less risky than CONAGRA FOODS. The stock trades about -0.22 of its potential returns per unit of risk. The CONAGRA FOODS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,600  in CONAGRA FOODS on October 5, 2024 and sell it today you would earn a total of  95.00  from holding CONAGRA FOODS or generate 3.65% return on investment over 90 days.

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

Performance Food Group  vs.  CONAGRA FOODS

Performance Food

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Performance Food unveiled solid returns over the last few months and may actually be approaching a breakup point.

CONAGRA FOODS

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CONAGRA FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CONAGRA 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 Performance Food and CONAGRA FOODS

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

The idea behind Performance Food Group and CONAGRA FOODS 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 Stocks Directory module to find actively traded stocks across global markets.