Correlation Between STEEL DYNAMICS and Performance Food

Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS and Performance 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 STEEL DYNAMICS and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STEEL DYNAMICS and Performance Food Group, you can compare the effects of market volatilities on STEEL DYNAMICS and Performance 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 STEEL DYNAMICS with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and Performance Food.

Diversification Opportunities for STEEL DYNAMICS and Performance Food

0.07

Correlation Coefficient

STEEL DYNAMICS  Performance Food

Significant diversification

The 3 months correlation between STEEL and Performance is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and STEEL DYNAMICS 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 STEEL DYNAMICS are associated (or correlated) with Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and Performance Food go up and down completely randomly.

Pair Corralation between STEEL DYNAMICS and Performance Food

Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 2.15 times more return on investment than Performance Food. However, STEEL DYNAMICS is 2.15 times more volatile than Performance Food Group. It trades about 0.29 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.3 per unit of risk. If you would invest  11,055  in STEEL DYNAMICS on October 23, 2024 and sell it today you would earn a total of  1,011  from holding STEEL DYNAMICS or generate 9.15% return on investment over 90 days.

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

STEEL DYNAMICS  vs.  Performance Food Group

STEEL DYNAMICS

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STEEL DYNAMICS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, STEEL DYNAMICS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Performance Food

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with STEEL DYNAMICS and Performance Food

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

The idea behind STEEL DYNAMICS and Performance Food Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.