Correlation Between Performance Food and JERONIMO MARTINS

Can any of the company-specific risk be diversified away by investing in both Performance Food and JERONIMO MARTINS 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 JERONIMO MARTINS 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 JERONIMO MARTINS UNADR2, you can compare the effects of market volatilities on Performance Food and JERONIMO MARTINS 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 JERONIMO MARTINS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and JERONIMO MARTINS.

Diversification Opportunities for Performance Food and JERONIMO MARTINS

0.69

Correlation Coefficient

Performance Food  JERONIMO MARTINS

Poor diversification

The 3 months correlation between Performance and JERONIMO is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and JERONIMO MARTINS UNADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JERONIMO MARTINS UNADR2 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 JERONIMO MARTINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JERONIMO MARTINS UNADR2 has no effect on the direction of Performance Food i.e., Performance Food and JERONIMO MARTINS go up and down completely randomly.

Pair Corralation between Performance Food and JERONIMO MARTINS

Assuming the 90 days horizon Performance Food Group is expected to generate 0.93 times more return on investment than JERONIMO MARTINS. However, Performance Food Group is 1.08 times less risky than JERONIMO MARTINS. It trades about 0.14 of its potential returns per unit of risk. JERONIMO MARTINS UNADR2 is currently generating about 0.08 per unit of risk. If you would invest  6,950  in Performance Food Group on September 23, 2024 and sell it today you would earn a total of  1,050  from holding Performance Food Group or generate 15.11% return on investment over 90 days.

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

Performance Food Group  vs.  JERONIMO MARTINS UNADR2

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. Despite nearly fragile basic indicators, Performance Food reported solid returns over the last few months and may actually be approaching a breakup point.

JERONIMO MARTINS UNADR2

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JERONIMO MARTINS UNADR2 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, JERONIMO MARTINS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Performance Food and JERONIMO MARTINS

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

The idea behind Performance Food Group and JERONIMO MARTINS UNADR2 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.

Check out your portfolio center.

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.