Correlation Between Performant Financial and Unifirst

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

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

Diversification Opportunities for Performant Financial and Unifirst

-0.58

Correlation Coefficient

Performant Financial  Unifirst

Excellent diversification

The 3 months correlation between Performant and Unifirst is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and Unifirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifirst and Performant Financial 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 Performant Financial are associated (or correlated) with Unifirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifirst has no effect on the direction of Performant Financial i.e., Performant Financial and Unifirst go up and down completely randomly.

Pair Corralation between Performant Financial and Unifirst

Given the investment horizon of 90 days Performant Financial is expected to under-perform the Unifirst. In addition to that, Performant Financial is 1.67 times more volatile than Unifirst. It trades about -0.02 of its total potential returns per unit of risk. Unifirst is currently generating about 0.07 per unit of volatility. If you would invest  18,573  in Unifirst on September 3, 2024 and sell it today you would earn a total of  1,514  from holding Unifirst or generate 8.15% return on investment over 90 days.

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

Performant Financial  vs.  Unifirst

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Performant Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Unifirst

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unifirst are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Unifirst may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Performant Financial and Unifirst

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

The idea behind Performant Financial and Unifirst 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.