Correlation Between Cleanaway Waste and Performance Food

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

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

Diversification Opportunities for Cleanaway Waste and Performance Food

-0.35

Correlation Coefficient

Cleanaway Waste  Performance Food

Very good diversification

The 3 months correlation between Cleanaway and Performance is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Cleanaway Waste 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 Cleanaway Waste Management 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 Cleanaway Waste i.e., Cleanaway Waste and Performance Food go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Performance Food

Assuming the 90 days trading horizon Cleanaway Waste Management is expected to under-perform the Performance Food. In addition to that, Cleanaway Waste is 1.78 times more volatile than Performance Food Group. It trades about -0.06 of its total potential returns per unit of risk. Performance Food Group is currently generating about 0.13 per unit of volatility. If you would invest  7,400  in Performance Food Group on October 11, 2024 and sell it today you would earn a total of  750.00  from holding Performance Food Group or generate 10.14% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  Performance Food Group

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Performance Food

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cleanaway Waste and Performance Food

The main advantage of trading using opposite Cleanaway Waste and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleanaway Waste 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 Cleanaway Waste Management 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.