Correlation Between US FOODS and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both US FOODS and Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle Group, you can compare the effects of market volatilities on US FOODS and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and Commercial Vehicle.
Diversification Opportunities for US FOODS and Commercial Vehicle
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UFH and Commercial is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of US FOODS i.e., US FOODS and Commercial Vehicle go up and down completely randomly.
Pair Corralation between US FOODS and Commercial Vehicle
Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 0.44 times more return on investment than Commercial Vehicle. However, US FOODS HOLDING is 2.25 times less risky than Commercial Vehicle. It trades about 0.14 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.12 per unit of risk. If you would invest 4,320 in US FOODS HOLDING on November 5, 2024 and sell it today you would earn a total of 2,630 from holding US FOODS HOLDING or generate 60.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. Commercial Vehicle Group
Performance |
| Timeline |
| US FOODS HOLDING |
| Commercial Vehicle |
US FOODS and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and Commercial Vehicle
The main advantage of trading using opposite US FOODS and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| US FOODS vs. Meli Hotels International | US FOODS vs. Geely Automobile Holdings | US FOODS vs. Pebblebrook Hotel Trust | US FOODS vs. MELIA HOTELS |
| Commercial Vehicle vs. SIVERS SEMICONDUCTORS AB | Commercial Vehicle vs. NorAm Drilling AS | Commercial Vehicle vs. Volkswagen AG | Commercial Vehicle vs. Darden Restaurants |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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