Correlation Between US FOODS and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both US FOODS and USWE SPORTS 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 USWE SPORTS 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 USWE SPORTS AB, you can compare the effects of market volatilities on US FOODS and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and USWE SPORTS.
Diversification Opportunities for US FOODS and USWE SPORTS
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UFH and USWE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of US FOODS i.e., US FOODS and USWE SPORTS go up and down completely randomly.
Pair Corralation between US FOODS and USWE SPORTS
Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 0.42 times more return on investment than USWE SPORTS. However, US FOODS HOLDING is 2.39 times less risky than USWE SPORTS. It trades about 0.14 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.05 per unit of risk. If you would invest 3,920 in US FOODS HOLDING on September 14, 2024 and sell it today you would earn a total of 2,630 from holding US FOODS HOLDING or generate 67.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.64% |
| Values | Daily Returns |
US FOODS HOLDING vs. USWE SPORTS AB
Performance |
| Timeline |
| US FOODS HOLDING |
| USWE SPORTS AB |
US FOODS and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and USWE SPORTS
The main advantage of trading using opposite US FOODS and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| US FOODS vs. USWE SPORTS AB | US FOODS vs. Columbia Sportswear | US FOODS vs. TITANIUM TRANSPORTGROUP | US FOODS vs. Fukuyama Transporting Co |
| USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. SIVERS SEMICONDUCTORS AB | USWE SPORTS vs. Norsk Hydro ASA | USWE SPORTS vs. Reliance Steel Aluminum |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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