Correlation Between US FOODS and IRONBARK ZINC
Can any of the company-specific risk be diversified away by investing in both US FOODS and IRONBARK ZINC 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 IRONBARK ZINC 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 IRONBARK ZINC, you can compare the effects of market volatilities on US FOODS and IRONBARK ZINC 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 IRONBARK ZINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and IRONBARK ZINC.
Diversification Opportunities for US FOODS and IRONBARK ZINC
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UFH and IRONBARK is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and IRONBARK ZINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRONBARK ZINC 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 IRONBARK ZINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRONBARK ZINC has no effect on the direction of US FOODS i.e., US FOODS and IRONBARK ZINC go up and down completely randomly.
Pair Corralation between US FOODS and IRONBARK ZINC
If you would invest 6,450 in US FOODS HOLDING on September 22, 2024 and sell it today you would earn a total of 50.00 from holding US FOODS HOLDING or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
US FOODS HOLDING vs. IRONBARK ZINC
Performance |
| Timeline |
| US FOODS HOLDING |
| IRONBARK ZINC |
US FOODS and IRONBARK ZINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and IRONBARK ZINC
The main advantage of trading using opposite US FOODS and IRONBARK ZINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, IRONBARK ZINC 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 IRONBARK ZINC will offset losses from the drop in IRONBARK ZINC's long position.The idea behind US FOODS HOLDING and IRONBARK ZINC 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.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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