Correlation Between Performance Food and MDJM

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

Diversification Opportunities for Performance Food and MDJM

0.2

Correlation Coefficient

Performance Food  MDJM

Modest diversification

The 3 months correlation between Performance and MDJM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Performance Food i.e., Performance Food and MDJM go up and down completely randomly.

Pair Corralation between Performance Food and MDJM

Given the investment horizon of 90 days Performance Food Group is expected to under-perform the MDJM. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 12.97 times less risky than MDJM. The stock trades about -0.04 of its potential returns per unit of risk. The MDJM is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  16.00  in MDJM on December 1, 2024 and sell it today you would earn a total of  8.00  from holding MDJM or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.67%
Values	Daily Returns

Performance Food Group  vs.  MDJM

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 rather sound technical and fundamental indicators, Performance Food is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MDJM

Risk-Adjusted Performance

OK

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating forward-looking indicators, MDJM demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Performance Food and MDJM

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

The idea behind Performance Food Group and MDJM 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.