Correlation Between Amazon and US FOODS
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and US FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and US FOODS HOLDING, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of US FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and US FOODS.
Diversification Opportunities for Amazon and US FOODS
Almost no diversification
The 3 months correlation between Amazon and UFH is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc 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 Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and US FOODS go up and down completely randomly.
Pair Corralation between Amazon and US FOODS
Assuming the 90 days trading horizon Amazon is expected to generate 2.42 times less return on investment than US FOODS. In addition to that, Amazon is 1.15 times more volatile than US FOODS HOLDING. It trades about 0.16 of its total potential returns per unit of risk. US FOODS HOLDING is currently generating about 0.45 per unit of volatility. If you would invest 5,650 in US FOODS HOLDING on September 2, 2024 and sell it today you would earn a total of 1,050 from holding US FOODS HOLDING or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. US FOODS HOLDING
Performance |
| Timeline |
| Amazon Inc |
| US FOODS HOLDING |
Amazon and US FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and US FOODS
The main advantage of trading using opposite Amazon and US FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.| Amazon vs. Richardson Electronics | Amazon vs. Mobilezone Holding AG | Amazon vs. METHODE ELECTRONICS | Amazon vs. Arrow Electronics |
| US FOODS vs. OAKTRSPECLENDNEW | US FOODS vs. Regions Financial | US FOODS vs. Cardinal Health | US FOODS vs. Bausch Health Companies |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |