Correlation Between Premier Foods and Global Net

Can any of the company-specific risk be diversified away by investing in both Premier Foods and Global Net 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 Premier Foods and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Premier Foods PLC and Global Net Lease, you can compare the effects of market volatilities on Premier Foods and Global Net 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 Premier Foods with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Global Net.

Diversification Opportunities for Premier Foods and Global Net

0.12

Correlation Coefficient

Premier Foods  Global Net

Average diversification

The 3 months correlation between Premier and Global is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Premier Foods 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 Premier Foods PLC are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Premier Foods i.e., Premier Foods and Global Net go up and down completely randomly.

Pair Corralation between Premier Foods and Global Net

Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.26 times more return on investment than Global Net. However, Premier Foods PLC is 3.88 times less risky than Global Net. It trades about 0.08 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.01 per unit of risk. If you would invest  11,194  in Premier Foods PLC on October 12, 2024 and sell it today you would earn a total of  7,006  from holding Premier Foods PLC or generate 62.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.39%
Values	Daily Returns

Premier Foods PLC  vs.  Global Net Lease

Premier Foods PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Premier Foods and Global Net

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

The idea behind Premier Foods PLC and Global Net Lease 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.