Correlation Between Varta AG and Performance Food

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

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

Diversification Opportunities for Varta AG and Performance Food

0.14

Correlation Coefficient

Varta AG  Performance Food

Average diversification

The 3 months correlation between Varta and Performance is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Varta AG 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 Varta AG 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 Varta AG i.e., Varta AG and Performance Food go up and down completely randomly.

Pair Corralation between Varta AG and Performance Food

Assuming the 90 days trading horizon Varta AG is expected to generate 9.86 times more return on investment than Performance Food. However, Varta AG is 9.86 times more volatile than Performance Food Group. It trades about 0.03 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.14 per unit of risk. If you would invest  152.00  in Varta AG on December 26, 2024 and sell it today you would lose (31.00) from holding Varta AG or give up 20.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

Varta AG  vs.  Performance Food Group

Varta AG

Risk-Adjusted Performance

Weak

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, Varta AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Varta AG and Performance Food

The main advantage of trading using opposite Varta AG and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG 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 Varta AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.