Correlation Between Performance Food and NOV
Can any of the company-specific risk be diversified away by investing in both Performance Food and NOV 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 NOV 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 NOV Inc, you can compare the effects of market volatilities on Performance Food and NOV 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 NOV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and NOV.
Diversification Opportunities for Performance Food and NOV
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Performance and NOV is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc 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 NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Performance Food i.e., Performance Food and NOV go up and down completely randomly.
Pair Corralation between Performance Food and NOV
Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the NOV. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 1.76 times less risky than NOV. The stock trades about -0.19 of its potential returns per unit of risk. The NOV Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,421 in NOV Inc on December 11, 2024 and sell it today you would lose (106.00) from holding NOV Inc or give up 7.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Performance Food Group vs. NOV Inc
Performance |
Timeline |
Performance Food |
NOV Inc |
Performance Food and NOV Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Performance Food and NOV
The main advantage of trading using opposite Performance Food and NOV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, NOV 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 NOV will offset losses from the drop in NOV's long position.Performance Food vs. Eastman Chemical | Performance Food vs. INTER CARS SA | Performance Food vs. Motorcar Parts of | Performance Food vs. CEOTRONICS |
NOV vs. Jupiter Fund Management | NOV vs. Platinum Investment Management | NOV vs. BRAGG GAMING GRP | NOV vs. HOCHSCHILD MINING |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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