Correlation Between Performance Food and Golden Entertainment

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

Diversification Opportunities for Performance Food and Golden Entertainment

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Performance and Golden is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Golden Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Entertainment 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 Golden Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Entertainment has no effect on the direction of Performance Food i.e., Performance Food and Golden Entertainment go up and down completely randomly.

Pair Corralation between Performance Food and Golden Entertainment

Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.81 times more return on investment than Golden Entertainment. However, Performance Food Group is 1.24 times less risky than Golden Entertainment. It trades about 0.18 of its potential returns per unit of risk. Golden Entertainment is currently generating about 0.07 per unit of risk. If you would invest  6,950  in Performance Food Group on April 23, 2025 and sell it today you would earn a total of  1,450  from holding Performance Food Group or generate 20.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Performance Food Group  vs.  Golden Entertainment

 Performance 
       Timeline  
Performance Food 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Performance Food unveiled solid returns over the last few months and may actually be approaching a breakup point.
Golden Entertainment 

Risk-Adjusted Performance

Modest

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

Performance Food and Golden Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Performance Food and Golden Entertainment

The main advantage of trading using opposite Performance Food and Golden Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Golden Entertainment 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 Golden Entertainment will offset losses from the drop in Golden Entertainment's long position.
The idea behind Performance Food Group and Golden Entertainment 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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