Correlation Between Pilgrims Pride and NightFood Holdings

Can any of the company-specific risk be diversified away by investing in both Pilgrims Pride and NightFood Holdings 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 Pilgrims Pride and NightFood Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pilgrims Pride Corp and NightFood Holdings, you can compare the effects of market volatilities on Pilgrims Pride and NightFood Holdings 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 Pilgrims Pride with a short position of NightFood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilgrims Pride and NightFood Holdings.

Diversification Opportunities for Pilgrims Pride and NightFood Holdings

0.18

Correlation Coefficient

Pilgrims Pride  NightFood Holdings

Average diversification

The 3 months correlation between Pilgrims and NightFood is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and NightFood Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NightFood Holdings and Pilgrims Pride 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 Pilgrims Pride Corp are associated (or correlated) with NightFood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NightFood Holdings has no effect on the direction of Pilgrims Pride i.e., Pilgrims Pride and NightFood Holdings go up and down completely randomly.

Pair Corralation between Pilgrims Pride and NightFood Holdings

Considering the 90-day investment horizon Pilgrims Pride Corp is expected to generate 0.21 times more return on investment than NightFood Holdings. However, Pilgrims Pride Corp is 4.79 times less risky than NightFood Holdings. It trades about 0.06 of its potential returns per unit of risk. NightFood Holdings is currently generating about -0.01 per unit of risk. If you would invest  5,127  in Pilgrims Pride Corp on December 3, 2024 and sell it today you would earn a total of  312.00  from holding Pilgrims Pride Corp or generate 6.09% return on investment over 90 days.

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

Pilgrims Pride Corp  vs.  NightFood Holdings

Pilgrims Pride Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pilgrims Pride may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NightFood Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NightFood Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NightFood Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pilgrims Pride and NightFood Holdings

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

The idea behind Pilgrims Pride Corp and NightFood Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.