Correlation Between Commercial Vehicle and US FOODS
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and US FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and US FOODS HOLDING, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of US FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and US FOODS.
Diversification Opportunities for Commercial Vehicle and US FOODS
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commercial and UFH is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group 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 Commercial Vehicle 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 Commercial Vehicle Group 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 Commercial Vehicle i.e., Commercial Vehicle and US FOODS go up and down completely randomly.
Pair Corralation between Commercial Vehicle and US FOODS
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the US FOODS. In addition to that, Commercial Vehicle is 2.11 times more volatile than US FOODS HOLDING. It trades about -0.07 of its total potential returns per unit of risk. US FOODS HOLDING is currently generating about 0.09 per unit of volatility. If you would invest 3,540 in US FOODS HOLDING on October 28, 2024 and sell it today you would earn a total of 3,110 from holding US FOODS HOLDING or generate 87.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. US FOODS HOLDING
Performance |
| Timeline |
| Commercial Vehicle |
| US FOODS HOLDING |
Commercial Vehicle and US FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and US FOODS
The main advantage of trading using opposite Commercial Vehicle and US FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
| US FOODS vs. Goodyear Tire Rubber | US FOODS vs. ON SEMICONDUCTOR | US FOODS vs. Martin Marietta Materials | US FOODS vs. NEWELL RUBBERMAID |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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