Correlation Between Performance Food and NISSIN FOODS

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

Diversification Opportunities for Performance Food and NISSIN FOODS

-0.21

Correlation Coefficient

Performance Food  NISSIN FOODS

Very good diversification

The 3 months correlation between Performance and NISSIN is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and NISSIN FOODS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSIN FOODS HLDGS 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 NISSIN FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSIN FOODS HLDGS has no effect on the direction of Performance Food i.e., Performance Food and NISSIN FOODS go up and down completely randomly.

Pair Corralation between Performance Food and NISSIN FOODS

Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.72 times more return on investment than NISSIN FOODS. However, Performance Food Group is 1.4 times less risky than NISSIN FOODS. It trades about 0.26 of its potential returns per unit of risk. NISSIN FOODS HLDGS is currently generating about 0.01 per unit of risk. If you would invest  7,000  in Performance Food Group on August 31, 2024 and sell it today you would earn a total of  1,250  from holding Performance Food Group or generate 17.86% 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.  NISSIN FOODS HLDGS

Performance Food

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. 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.

NISSIN FOODS HLDGS

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NISSIN FOODS HLDGS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, NISSIN FOODS may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Performance Food and NISSIN FOODS

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

The idea behind Performance Food Group and NISSIN FOODS HLDGS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.