Correlation Between SWISS WATER and US FOODS
Can any of the company-specific risk be diversified away by investing in both SWISS WATER 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 SWISS WATER and US FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and US FOODS HOLDING, you can compare the effects of market volatilities on SWISS WATER 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 SWISS WATER with a short position of US FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and US FOODS.
Diversification Opportunities for SWISS WATER and US FOODS
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SWISS and UFH is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 SWISS WATER i.e., SWISS WATER and US FOODS go up and down completely randomly.
Pair Corralation between SWISS WATER and US FOODS
Assuming the 90 days horizon SWISS WATER is expected to generate 1.35 times less return on investment than US FOODS. In addition to that, SWISS WATER is 1.76 times more volatile than US FOODS HOLDING. It trades about 0.05 of its total potential returns per unit of risk. US FOODS HOLDING is currently generating about 0.11 per unit of volatility. If you would invest 3,860 in US FOODS HOLDING on September 12, 2024 and sell it today you would earn a total of 2,790 from holding US FOODS HOLDING or generate 72.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. US FOODS HOLDING
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| US FOODS HOLDING |
SWISS WATER and US FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and US FOODS
The main advantage of trading using opposite SWISS WATER and US FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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's long position.| SWISS WATER vs. Chongqing Machinery Electric | SWISS WATER vs. Insteel Industries | SWISS WATER vs. RELIANCE STEEL AL | SWISS WATER vs. Hitachi Construction Machinery |
| US FOODS vs. Monster Beverage Corp | US FOODS vs. Flutter Entertainment PLC | US FOODS vs. CNVISION MEDIA | US FOODS vs. SCANSOURCE |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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