Correlation Between Performance Food and SVENSKA CELLULO

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

Diversification Opportunities for Performance Food and SVENSKA CELLULO

-0.58

Correlation Coefficient

Performance Food  SVENSKA CELLULO

Excellent diversification

The 3 months correlation between Performance and SVENSKA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B 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 SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of Performance Food i.e., Performance Food and SVENSKA CELLULO go up and down completely randomly.

Pair Corralation between Performance Food and SVENSKA CELLULO

Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.97 times more return on investment than SVENSKA CELLULO. However, Performance Food Group is 1.03 times less risky than SVENSKA CELLULO. It trades about 0.19 of its potential returns per unit of risk. SVENSKA CELLULO B is currently generating about -0.09 per unit of risk. If you would invest  6,900  in Performance Food Group on September 24, 2024 and sell it today you would earn a total of  1,200  from holding Performance Food Group or generate 17.39% return on investment over 90 days.

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

Performance Food Group  vs.  SVENSKA CELLULO B

Performance Food

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 14 (%) 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.

SVENSKA CELLULO B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVENSKA CELLULO B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Performance Food and SVENSKA CELLULO

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

The idea behind Performance Food Group and SVENSKA CELLULO B 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.