Correlation Between Union Pacific and Performance Food

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

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

Diversification Opportunities for Union Pacific and Performance Food

0.54

Correlation Coefficient

Union Pacific  Performance Food

Very weak diversification

The 3 months correlation between Union and Performance is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Union Pacific and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food and Union Pacific 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 Union Pacific 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 Union Pacific i.e., Union Pacific and Performance Food go up and down completely randomly.

Pair Corralation between Union Pacific and Performance Food

Considering the 90-day investment horizon Union Pacific is expected to under-perform the Performance Food. But the stock apears to be less risky and, when comparing its historical volatility, Union Pacific is 1.19 times less risky than Performance Food. The stock trades about -0.02 of its potential returns per unit of risk. The Performance Food Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,977  in Performance Food Group on May 2, 2025 and sell it today you would earn a total of  1,231  from holding Performance Food Group or generate 13.71% return on investment over 90 days.

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

Union Pacific  vs.  Performance Food Group

Union Pacific

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Union Pacific are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Union Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Performance Food

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 18 (%) 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.

Pair Trading with Union Pacific and Performance Food

The main advantage of trading using opposite Union Pacific and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Pacific 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 Union Pacific 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.