Correlation Between Performance Food and Nokia

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

Diversification Opportunities for Performance Food and Nokia

-0.39

Correlation Coefficient

Performance Food  Nokia

Very good diversification

The 3 months correlation between Performance and Nokia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of Performance Food i.e., Performance Food and Nokia go up and down completely randomly.

Pair Corralation between Performance Food and Nokia

Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the Nokia. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 1.4 times less risky than Nokia. The stock trades about -0.16 of its potential returns per unit of risk. The Nokia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  425.00  in Nokia on December 24, 2024 and sell it today you would earn a total of  59.00  from holding Nokia or generate 13.88% 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.  Nokia

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 weak 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.

Nokia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nokia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Nokia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Performance Food and Nokia

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

The idea behind Performance Food Group and Nokia 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .