Correlation Between 49456BAV3 and Performance Food

Can any of the company-specific risk be diversified away by investing in both 49456BAV3 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 49456BAV3 and Performance Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KMI 48 01 FEB 33 and Performance Food Group, you can compare the effects of market volatilities on 49456BAV3 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 49456BAV3 with a short position of Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of 49456BAV3 and Performance Food.

Diversification Opportunities for 49456BAV3 and Performance Food

-0.2

Correlation Coefficient

49456BAV3  Performance Food

Good diversification

The 3 months correlation between 49456BAV3 and Performance is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding KMI 48 01 FEB 33 and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and 49456BAV3 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 KMI 48 01 FEB 33 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 49456BAV3 i.e., 49456BAV3 and Performance Food go up and down completely randomly.

Pair Corralation between 49456BAV3 and Performance Food

Assuming the 90 days trading horizon KMI 48 01 FEB 33 is expected to generate 0.32 times more return on investment than Performance Food. However, KMI 48 01 FEB 33 is 3.13 times less risky than Performance Food. It trades about 0.01 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.08 per unit of risk. If you would invest  9,505  in KMI 48 01 FEB 33 on December 27, 2024 and sell it today you would earn a total of  26.00  from holding KMI 48 01 FEB 33 or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

KMI 48 01 FEB 33  vs.  Performance Food Group

KMI 48 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days KMI 48 01 FEB 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49456BAV3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with 49456BAV3 and Performance Food

The main advantage of trading using opposite 49456BAV3 and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 49456BAV3 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 KMI 48 01 FEB 33 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.