Correlation Between US FOODS and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both US FOODS and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS, you can compare the effects of market volatilities on US FOODS and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and AIR PRODCHEMICALS.
Diversification Opportunities for US FOODS and AIR PRODCHEMICALS
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between UFH and AIR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of US FOODS i.e., US FOODS and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between US FOODS and AIR PRODCHEMICALS
Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 1.23 times more return on investment than AIR PRODCHEMICALS. However, US FOODS is 1.23 times more volatile than AIR PRODCHEMICALS. It trades about 0.19 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.03 per unit of risk. If you would invest 5,600 in US FOODS HOLDING on October 24, 2024 and sell it today you would earn a total of 1,000.00 from holding US FOODS HOLDING or generate 17.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| US FOODS HOLDING |
| AIR PRODCHEMICALS |
US FOODS and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and AIR PRODCHEMICALS
The main advantage of trading using opposite US FOODS and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.The idea behind US FOODS HOLDING and AIR PRODCHEMICALS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |