Correlation Between NorAm Drilling and US Foods
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling 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 NorAm Drilling and US Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and US Foods Holding, you can compare the effects of market volatilities on NorAm Drilling 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 NorAm Drilling with a short position of US Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and US Foods.
Diversification Opportunities for NorAm Drilling and US Foods
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NorAm and UFH is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS 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 NorAm Drilling 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 NorAm Drilling AS 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 NorAm Drilling i.e., NorAm Drilling and US Foods go up and down completely randomly.
Pair Corralation between NorAm Drilling and US Foods
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 7.08 times more return on investment than US Foods. However, NorAm Drilling is 7.08 times more volatile than US Foods Holding. It trades about 0.06 of its potential returns per unit of risk. US Foods Holding is currently generating about 0.1 per unit of risk. If you would invest 108.00 in NorAm Drilling AS on September 19, 2024 and sell it today you would earn a total of 171.00 from holding NorAm Drilling AS or generate 158.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NorAm Drilling AS vs. US Foods Holding
Performance |
| Timeline |
| NorAm Drilling AS |
| US Foods Holding |
NorAm Drilling and US Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and US Foods
The main advantage of trading using opposite NorAm Drilling and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling 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.| NorAm Drilling vs. Japan Medical Dynamic | NorAm Drilling vs. Wizz Air Holdings | NorAm Drilling vs. WIZZ AIR HLDGUNSPADR4 | NorAm Drilling vs. CVR Medical Corp |
| US Foods vs. Metro AG | US Foods vs. Superior Plus Corp | US Foods vs. SIVERS SEMICONDUCTORS AB | US Foods vs. NorAm Drilling AS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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