Correlation Between Jerónimo Martins and US Foods
Can any of the company-specific risk be diversified away by investing in both Jerónimo Martins 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 Jerónimo Martins and US Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jernimo Martins SGPS and US Foods Holding, you can compare the effects of market volatilities on Jerónimo Martins 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 Jerónimo Martins with a short position of US Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jerónimo Martins and US Foods.
Diversification Opportunities for Jerónimo Martins and US Foods
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jerónimo and UFH is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Jernimo Martins SGPS 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 Jerónimo Martins 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 Jernimo Martins SGPS 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 Jerónimo Martins i.e., Jerónimo Martins and US Foods go up and down completely randomly.
Pair Corralation between Jerónimo Martins and US Foods
Assuming the 90 days horizon Jernimo Martins SGPS is expected to under-perform the US Foods. In addition to that, Jerónimo Martins is 1.37 times more volatile than US Foods Holding. It trades about -0.03 of its total potential returns per unit of risk. US Foods Holding is currently generating about 0.17 per unit of volatility. If you would invest 4,800 in US Foods Holding on September 3, 2024 and sell it today you would earn a total of 1,900 from holding US Foods Holding or generate 39.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jernimo Martins SGPS vs. US Foods Holding
Performance |
| Timeline |
| Jernimo Martins SGPS |
| US Foods Holding |
Jerónimo Martins and US Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jerónimo Martins and US Foods
The main advantage of trading using opposite Jerónimo Martins and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jerónimo Martins 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.| Jerónimo Martins vs. Performance Food Group | Jerónimo Martins vs. Superior Plus Corp | Jerónimo Martins vs. NMI Holdings | Jerónimo Martins vs. Origin Agritech |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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