Correlation Between Premier Foods and John B

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Can any of the company-specific risk be diversified away by investing in both Premier Foods and John B 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 Premier Foods and John B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods Plc and John B Sanfilippo, you can compare the effects of market volatilities on Premier Foods and John B 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 Premier Foods with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and John B.

Diversification Opportunities for Premier Foods and John B

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Premier and John is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo and Premier Foods 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 Premier Foods Plc are associated (or correlated) with John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of Premier Foods i.e., Premier Foods and John B go up and down completely randomly.

Pair Corralation between Premier Foods and John B

If you would invest  208.00  in Premier Foods Plc on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Premier Foods Plc or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy1.59%
ValuesDaily Returns

Premier Foods Plc  vs.  John B Sanfilippo

 Performance 
       Timeline  
Premier Foods Plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Premier Foods Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Premier Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
John B Sanfilippo 

Risk-Adjusted Performance

0 of 100

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

Premier Foods and John B Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Premier Foods and John B

The main advantage of trading using opposite Premier Foods and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, John B 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 John B will offset losses from the drop in John B's long position.
The idea behind Premier Foods Plc and John B Sanfilippo 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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