Correlation Between Performance Food and Lionsgate Studios

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

Diversification Opportunities for Performance Food and Lionsgate Studios

0.26

Correlation Coefficient

Performance Food  Lionsgate Studios

Modest diversification

The 3 months correlation between Performance and Lionsgate is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Lionsgate Studios Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionsgate Studios Corp 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 Lionsgate Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionsgate Studios Corp has no effect on the direction of Performance Food i.e., Performance Food and Lionsgate Studios go up and down completely randomly.

Pair Corralation between Performance Food and Lionsgate Studios

Given the investment horizon of 90 days Performance Food Group is expected to under-perform the Lionsgate Studios. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 2.84 times less risky than Lionsgate Studios. The stock trades about -0.3 of its potential returns per unit of risk. The Lionsgate Studios Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  714.00  in Lionsgate Studios Corp on October 8, 2024 and sell it today you would earn a total of  95.00  from holding Lionsgate Studios Corp or generate 13.31% return on investment over 90 days.

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

Performance Food Group  vs.  Lionsgate Studios Corp

Performance Food

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lionsgate Studios Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lionsgate Studios Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Lionsgate Studios displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Performance Food and Lionsgate Studios

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

The idea behind Performance Food Group and Lionsgate Studios Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.