Correlation Between Performance Food and Andersons

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

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

Diversification Opportunities for Performance Food and Andersons

-0.05

Correlation Coefficient

Performance Food  Andersons

Good diversification

The 3 months correlation between Performance and Andersons is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and The Andersons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andersons and Performance Food 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 Performance Food Group are associated (or correlated) with Andersons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andersons has no effect on the direction of Performance Food i.e., Performance Food and Andersons go up and down completely randomly.

Pair Corralation between Performance Food and Andersons

Given the investment horizon of 90 days Performance Food Group is expected to generate 0.73 times more return on investment than Andersons. However, Performance Food Group is 1.38 times less risky than Andersons. It trades about 0.08 of its potential returns per unit of risk. The Andersons is currently generating about 0.01 per unit of risk. If you would invest  6,133  in Performance Food Group on August 12, 2024 and sell it today you would earn a total of  2,464  from holding Performance Food Group or generate 40.18% return on investment over 90 days.

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

Performance Food Group  vs.  The Andersons

Performance Food

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Performance Food exhibited solid returns over the last few months and may actually be approaching a breakup point.

Andersons

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Andersons are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Andersons may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Performance Food and Andersons

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

The idea behind Performance Food Group and The Andersons 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.