Correlation Between US FOODS and Peloton Interactive
Can any of the company-specific risk be diversified away by investing in both US FOODS and Peloton Interactive 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 US FOODS and Peloton Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US FOODS HOLDING and Peloton Interactive, you can compare the effects of market volatilities on US FOODS and Peloton Interactive 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 US FOODS with a short position of Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and Peloton Interactive.
Diversification Opportunities for US FOODS and Peloton Interactive
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UFH and Peloton is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive and US FOODS 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 US FOODS HOLDING are associated (or correlated) with Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of US FOODS i.e., US FOODS and Peloton Interactive go up and down completely randomly.
Pair Corralation between US FOODS and Peloton Interactive
Assuming the 90 days trading horizon US FOODS is expected to generate 3.91 times less return on investment than Peloton Interactive. But when comparing it to its historical volatility, US FOODS HOLDING is 4.31 times less risky than Peloton Interactive. It trades about 0.17 of its potential returns per unit of risk. Peloton Interactive is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 325.00 in Peloton Interactive on September 1, 2024 and sell it today you would earn a total of 614.00 from holding Peloton Interactive or generate 188.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. Peloton Interactive
Performance |
| Timeline |
| US FOODS HOLDING |
| Peloton Interactive |
US FOODS and Peloton Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and Peloton Interactive
The main advantage of trading using opposite US FOODS and Peloton Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, Peloton Interactive 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 Peloton Interactive will offset losses from the drop in Peloton Interactive's long position.| US FOODS vs. OAKTRSPECLENDNEW | US FOODS vs. Regions Financial | US FOODS vs. Cardinal Health | US FOODS vs. Bausch Health Companies |
| Peloton Interactive vs. Li Ning Company | Peloton Interactive vs. Trip Group Limited | Peloton Interactive vs. Superior Plus Corp | Peloton Interactive vs. NMI Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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