Correlation Between Performance Food and Ingles Markets

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

Diversification Opportunities for Performance Food and Ingles Markets

-0.17

Correlation Coefficient

Performance Food  Ingles Markets

Good diversification

The 3 months correlation between Performance and Ingles is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Ingles Markets Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingles Markets 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 Ingles Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingles Markets has no effect on the direction of Performance Food i.e., Performance Food and Ingles Markets go up and down completely randomly.

Pair Corralation between Performance Food and Ingles Markets

Given the investment horizon of 90 days Performance Food is expected to generate 1.35 times less return on investment than Ingles Markets. In addition to that, Performance Food is 1.01 times more volatile than Ingles Markets Incorporated. It trades about 0.23 of its total potential returns per unit of risk. Ingles Markets Incorporated is currently generating about 0.31 per unit of volatility. If you would invest  6,569  in Ingles Markets Incorporated on September 3, 2024 and sell it today you would earn a total of  821.00  from holding Ingles Markets Incorporated or generate 12.5% 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.  Ingles Markets Incorporated

Performance Food

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 16 (%) 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.

Ingles Markets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ingles Markets Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ingles Markets is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Performance Food and Ingles Markets

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

The idea behind Performance Food Group and Ingles Markets Incorporated 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.