Correlation Between Performance Food and Northern Data

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

Diversification Opportunities for Performance Food and Northern Data

0.9

Correlation Coefficient

Performance Food  Northern Data

Almost no diversification

The 3 months correlation between Performance and Northern is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Northern Data AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Data AG 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 Northern Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Data AG has no effect on the direction of Performance Food i.e., Performance Food and Northern Data go up and down completely randomly.

Pair Corralation between Performance Food and Northern Data

Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.43 times more return on investment than Northern Data. However, Performance Food Group is 2.3 times less risky than Northern Data. It trades about -0.14 of its potential returns per unit of risk. Northern Data AG is currently generating about -0.22 per unit of risk. If you would invest  8,150  in Performance Food Group on December 26, 2024 and sell it today you would lose (1,100) from holding Performance Food Group or give up 13.5% of portfolio value over 90 days.

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

Performance Food Group  vs.  Northern Data AG

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Northern Data AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Data AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Performance Food and Northern Data

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

The idea behind Performance Food Group and Northern Data AG 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.