Correlation Between Performance Food and MDJH Old

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

Diversification Opportunities for Performance Food and MDJH Old

0.08

Correlation Coefficient

Performance Food  MDJH Old

Significant diversification

The 3 months correlation between Performance and MDJH is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and MDJH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJH Old 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 MDJH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJH Old has no effect on the direction of Performance Food i.e., Performance Food and MDJH Old go up and down completely randomly.

Pair Corralation between Performance Food and MDJH Old

Given the investment horizon of 90 days Performance Food Group is expected to under-perform the MDJH Old. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 12.26 times less risky than MDJH Old. The stock trades about -0.08 of its potential returns per unit of risk. The MDJH Old is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  20.00  in MDJH Old on December 29, 2024 and sell it today you would earn a total of  4.00  from holding MDJH Old or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.34%
Values	Daily Returns

Performance Food Group  vs.  MDJH Old

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MDJH Old

Risk-Adjusted Performance

OK

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

Pair Trading with Performance Food and MDJH Old

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

The idea behind Performance Food Group and MDJH Old 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.