Correlation Between NMI Holdings and US Foods
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and US 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 NMI Holdings and US Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and US Foods Holding, you can compare the effects of market volatilities on NMI Holdings and US 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 NMI Holdings with a short position of US Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and US Foods.
Diversification Opportunities for NMI Holdings and US Foods
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and UFH is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and US Foods Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Foods Holding and NMI Holdings 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 NMI Holdings are associated (or correlated) with US Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Foods Holding has no effect on the direction of NMI Holdings i.e., NMI Holdings and US Foods go up and down completely randomly.
Pair Corralation between NMI Holdings and US Foods
Assuming the 90 days horizon NMI Holdings is expected to generate 1.23 times less return on investment than US Foods. But when comparing it to its historical volatility, NMI Holdings is 1.0 times less risky than US Foods. It trades about 0.11 of its potential returns per unit of risk. US Foods Holding is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,140 in US Foods Holding on September 3, 2024 and sell it today you would earn a total of 2,560 from holding US Foods Holding or generate 61.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. US Foods Holding
Performance |
| Timeline |
| NMI Holdings |
| US Foods Holding |
NMI Holdings and US Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and US Foods
The main advantage of trading using opposite NMI Holdings and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, US 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 US Foods will offset losses from the drop in US Foods' long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| US Foods vs. Performance Food Group | US Foods vs. Superior Plus Corp | US Foods vs. NMI Holdings | US Foods vs. Origin Agritech |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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