Correlation Between US FOODS and PLAY2CHILL
Can any of the company-specific risk be diversified away by investing in both US FOODS and PLAY2CHILL 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 PLAY2CHILL 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 PLAY2CHILL SA ZY, you can compare the effects of market volatilities on US FOODS and PLAY2CHILL 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 PLAY2CHILL. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and PLAY2CHILL.
Diversification Opportunities for US FOODS and PLAY2CHILL
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UFH and PLAY2CHILL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and PLAY2CHILL SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAY2CHILL SA ZY 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 PLAY2CHILL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAY2CHILL SA ZY has no effect on the direction of US FOODS i.e., US FOODS and PLAY2CHILL go up and down completely randomly.
Pair Corralation between US FOODS and PLAY2CHILL
Assuming the 90 days trading horizon US FOODS is expected to generate 2.88 times less return on investment than PLAY2CHILL. But when comparing it to its historical volatility, US FOODS HOLDING is 2.65 times less risky than PLAY2CHILL. It trades about 0.14 of its potential returns per unit of risk. PLAY2CHILL SA ZY is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 80.00 in PLAY2CHILL SA ZY on September 12, 2024 and sell it today you would earn a total of 10.00 from holding PLAY2CHILL SA ZY or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
US FOODS HOLDING vs. PLAY2CHILL SA ZY
Performance |
| Timeline |
| US FOODS HOLDING |
| PLAY2CHILL SA ZY |
US FOODS and PLAY2CHILL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and PLAY2CHILL
The main advantage of trading using opposite US FOODS and PLAY2CHILL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, PLAY2CHILL 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 PLAY2CHILL will offset losses from the drop in PLAY2CHILL's long position.| US FOODS vs. Monster Beverage Corp | US FOODS vs. Flutter Entertainment PLC | US FOODS vs. CNVISION MEDIA | US FOODS vs. SCANSOURCE |
| PLAY2CHILL vs. NEXON Co | PLAY2CHILL vs. Take Two Interactive Software | PLAY2CHILL vs. Superior Plus Corp | PLAY2CHILL vs. SIVERS SEMICONDUCTORS AB |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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