Correlation Between Pilgrims Pride and Nates Food

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

Diversification Opportunities for Pilgrims Pride and Nates Food

0.0

Correlation Coefficient

Pilgrims Pride  Nates Food

Pay attention - limited upside

The 3 months correlation between Pilgrims and Nates is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and Nates Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nates Food 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 Nates Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nates Food has no effect on the direction of Pilgrims Pride i.e., Pilgrims Pride and Nates Food go up and down completely randomly.

Pair Corralation between Pilgrims Pride and Nates Food

Considering the 90-day investment horizon Pilgrims Pride Corp is expected to generate 0.18 times more return on investment than Nates Food. However, Pilgrims Pride Corp is 5.59 times less risky than Nates Food. It trades about 0.15 of its potential returns per unit of risk. Nates Food Co is currently generating about -0.13 per unit of risk. If you would invest  4,105  in Pilgrims Pride Corp on September 14, 2024 and sell it today you would earn a total of  894.00  from holding Pilgrims Pride Corp or generate 21.78% return on investment over 90 days.

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

Pilgrims Pride Corp  vs.  Nates Food Co

Pilgrims Pride Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pilgrims Pride exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nates Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nates Food Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Pilgrims Pride and Nates Food

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

The idea behind Pilgrims Pride Corp and Nates Food Co 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.