Correlation Between Alliance Data and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Alliance Data and Premier Foods 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 Alliance Data and Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and Premier Foods PLC, you can compare the effects of market volatilities on Alliance Data and Premier Foods 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 Alliance Data with a short position of Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Premier Foods.
Diversification Opportunities for Alliance Data and Premier Foods
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alliance and Premier is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC and Alliance Data 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 Alliance Data Systems are associated (or correlated) with Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Alliance Data i.e., Alliance Data and Premier Foods go up and down completely randomly.
Pair Corralation between Alliance Data and Premier Foods
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 2.12 times more return on investment than Premier Foods. However, Alliance Data is 2.12 times more volatile than Premier Foods PLC. It trades about 0.07 of its potential returns per unit of risk. Premier Foods PLC is currently generating about -0.07 per unit of risk. If you would invest 6,591 in Alliance Data Systems on September 5, 2025 and sell it today you would earn a total of 561.00 from holding Alliance Data Systems or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.38% |
| Values | Daily Returns |
Alliance Data Systems vs. Premier Foods PLC
Performance |
| Timeline |
| Alliance Data Systems |
| Premier Foods PLC |
Alliance Data and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Premier Foods
The main advantage of trading using opposite Alliance Data and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Alliance Data vs. Norman Broadbent Plc | Alliance Data vs. Molson Coors Beverage | Alliance Data vs. MoneysupermarketCom Group PLC | Alliance Data vs. Premier Foods PLC |
| Premier Foods vs. Sparebank 1 SR | Premier Foods vs. Cembra Money Bank | Premier Foods vs. Alliance Data Systems | Premier Foods vs. St Galler Kantonalbank |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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