Correlation Between Premier Foods and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Premier Foods and BBB 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 Premier Foods and BBB Foods 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 BBB Foods, you can compare the effects of market volatilities on Premier Foods and BBB 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 Premier Foods with a short position of BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and BBB Foods.
Diversification Opportunities for Premier Foods and BBB Foods
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Premier and BBB is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods plc and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Premier Foods i.e., Premier Foods and BBB Foods go up and down completely randomly.
Pair Corralation between Premier Foods and BBB Foods
Assuming the 90 days horizon Premier Foods plc is expected to generate 0.62 times more return on investment than BBB Foods. However, Premier Foods plc is 1.61 times less risky than BBB Foods. It trades about 0.14 of its potential returns per unit of risk. BBB Foods is currently generating about -0.1 per unit of risk. If you would invest 245.00 in Premier Foods plc on April 25, 2025 and sell it today you would earn a total of 30.00 from holding Premier Foods plc or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods plc vs. BBB Foods
Performance |
| Timeline |
| Premier Foods plc |
| BBB Foods |
Premier Foods and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and BBB Foods
The main advantage of trading using opposite Premier Foods and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, BBB 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Premier Foods vs. Premier Foods Plc | Premier Foods vs. Torque Lifestyle Brands | Premier Foods vs. First Pacific | Premier Foods vs. First Pacific |
| BBB Foods vs. AerCap Holdings NV | BBB Foods vs. Ryder System | BBB Foods vs. Cayson Acquisition Corp | BBB Foods vs. Proficient Auto Logistics, |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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