Correlation Between US FOODS and CeoTronics
Can any of the company-specific risk be diversified away by investing in both US FOODS and CeoTronics 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 CeoTronics 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 CeoTronics AG, you can compare the effects of market volatilities on US FOODS and CeoTronics 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 CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and CeoTronics.
Diversification Opportunities for US FOODS and CeoTronics
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UFH and CeoTronics is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of US FOODS i.e., US FOODS and CeoTronics go up and down completely randomly.
Pair Corralation between US FOODS and CeoTronics
Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 0.57 times more return on investment than CeoTronics. However, US FOODS HOLDING is 1.75 times less risky than CeoTronics. It trades about 0.22 of its potential returns per unit of risk. CeoTronics AG is currently generating about -0.03 per unit of risk. If you would invest 6,500 in US FOODS HOLDING on November 8, 2024 and sell it today you would earn a total of 350.00 from holding US FOODS HOLDING or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. CeoTronics AG
Performance |
| Timeline |
| US FOODS HOLDING |
| CeoTronics AG |
US FOODS and CeoTronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and CeoTronics
The main advantage of trading using opposite US FOODS and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.| US FOODS vs. PennantPark Investment | US FOODS vs. NTG Nordic Transport | US FOODS vs. Chuangs China Investments | US FOODS vs. Gaztransport Technigaz SA |
| CeoTronics vs. MONEYSUPERMARKET | CeoTronics vs. Cal Maine Foods | CeoTronics vs. Lifeway Foods | CeoTronics vs. Fevertree Drinks PLC |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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