Correlation Between Performance Food and Air Lease

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

Diversification Opportunities for Performance Food and Air Lease

0.87

Correlation Coefficient

Performance Food  Air Lease

Very poor diversification

The 3 months correlation between Performance and Air is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Performance Food i.e., Performance Food and Air Lease go up and down completely randomly.

Pair Corralation between Performance Food and Air Lease

Assuming the 90 days trading horizon Performance Food is expected to generate 1.39 times less return on investment than Air Lease. But when comparing it to its historical volatility, Performance Food Group is 1.26 times less risky than Air Lease. It trades about 0.35 of its potential returns per unit of risk. Air Lease is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  4,060  in Air Lease on September 5, 2024 and sell it today you would earn a total of  740.00  from holding Air Lease or generate 18.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Performance Food Group  vs.  Air Lease

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 comparatively uncertain basic indicators, Performance Food unveiled solid returns over the last few months and may actually be approaching a breakup point.

Air Lease

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Performance Food and Air Lease

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

The idea behind Performance Food Group and Air Lease 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.