Correlation Between Metro AG and US Foods
Can any of the company-specific risk be diversified away by investing in both Metro AG 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 Metro AG and US Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro AG and US Foods Holding, you can compare the effects of market volatilities on Metro AG 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 Metro AG with a short position of US Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro AG and US Foods.
Diversification Opportunities for Metro AG and US Foods
Very good diversification
The 3 months correlation between Metro and UFH is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG 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 Metro AG 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 Metro AG 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 Metro AG i.e., Metro AG and US Foods go up and down completely randomly.
Pair Corralation between Metro AG and US Foods
Assuming the 90 days trading horizon Metro AG is expected to under-perform the US Foods. In addition to that, Metro AG is 1.95 times more volatile than US Foods Holding. It trades about -0.01 of its total potential returns per unit of risk. US Foods Holding is currently generating about 0.1 per unit of volatility. If you would invest 3,340 in US Foods Holding on September 3, 2024 and sell it today you would earn a total of 3,360 from holding US Foods Holding or generate 100.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro AG vs. US Foods Holding
Performance |
| Timeline |
| Metro AG |
| US Foods Holding |
Metro AG and US Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro AG and US Foods
The main advantage of trading using opposite Metro AG and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro AG 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.| Metro AG vs. BROADSTNET LEADL 00025 | Metro AG vs. Tyson Foods | Metro AG vs. Astral Foods Limited | Metro AG vs. Warner Music Group |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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