Correlation Between Performance Food and Varta AG

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

Diversification Opportunities for Performance Food and Varta AG

0.0

Correlation Coefficient

Performance Food  Varta AG

Pay attention - limited upside

The 3 months correlation between Performance and Varta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Performance Food i.e., Performance Food and Varta AG go up and down completely randomly.

Pair Corralation between Performance Food and Varta AG

If you would invest  5,700  in Performance Food Group on October 8, 2024 and sell it today you would earn a total of  2,450  from holding Performance Food Group or generate 42.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Performance Food Group  vs.  Varta AG

Performance Food

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food unveiled solid returns over the last few months and may actually be approaching a breakup point.

Varta AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Varta AG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Performance Food and Varta AG

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

The idea behind Performance Food Group and Varta 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.