Correlation Between Performance Food and LIFEWAY FOODS
Can any of the company-specific risk be diversified away by investing in both Performance Food and LIFEWAY 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 LIFEWAY 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 LIFEWAY FOODS, you can compare the effects of market volatilities on Performance Food and LIFEWAY 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 LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and LIFEWAY FOODS.
Diversification Opportunities for Performance Food and LIFEWAY FOODS
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Performance and LIFEWAY is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY 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 LIFEWAY FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFEWAY FOODS has no effect on the direction of Performance Food i.e., Performance Food and LIFEWAY FOODS go up and down completely randomly.
Pair Corralation between Performance Food and LIFEWAY FOODS
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.56 times more return on investment than LIFEWAY FOODS. However, Performance Food Group is 1.8 times less risky than LIFEWAY FOODS. It trades about 0.18 of its potential returns per unit of risk. LIFEWAY FOODS is currently generating about -0.05 per unit of risk. If you would invest 6,950 in Performance Food Group on September 25, 2024 and sell it today you would earn a total of 1,150 from holding Performance Food Group or generate 16.55% 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. LIFEWAY FOODS
Performance |
Timeline |
Performance Food |
LIFEWAY FOODS |
Performance Food and LIFEWAY FOODS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Performance Food and LIFEWAY FOODS
The main advantage of trading using opposite Performance Food and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, LIFEWAY 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 LIFEWAY FOODS will offset losses from the drop in LIFEWAY FOODS's long position.Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Microsoft | LIFEWAY FOODS vs. Microsoft |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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