Correlation Between Performance Food and Tsakos Energy

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

Diversification Opportunities for Performance Food and Tsakos Energy

-0.61

Correlation Coefficient

Performance Food  Tsakos Energy

Excellent diversification

The 3 months correlation between Performance and Tsakos is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation 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 Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of Performance Food i.e., Performance Food and Tsakos Energy go up and down completely randomly.

Pair Corralation between Performance Food and Tsakos Energy

Given the investment horizon of 90 days Performance Food Group is expected to generate 0.59 times more return on investment than Tsakos Energy. However, Performance Food Group is 1.7 times less risky than Tsakos Energy. It trades about 0.05 of its potential returns per unit of risk. Tsakos Energy Navigation is currently generating about 0.03 per unit of risk. If you would invest  6,267  in Performance Food Group on October 23, 2024 and sell it today you would earn a total of  2,506  from holding Performance Food Group or generate 39.99% return on investment over 90 days.

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

Performance Food Group  vs.  Tsakos Energy Navigation

Performance Food

Risk-Adjusted Performance

7 of 100

Modest

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.

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Performance Food and Tsakos Energy

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

The idea behind Performance Food Group and Tsakos Energy Navigation 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.