Correlation Between US FOODS and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both US FOODS and THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE, you can compare the effects of market volatilities on US FOODS and THAI BEVERAGE 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 THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and THAI BEVERAGE.
Diversification Opportunities for US FOODS and THAI BEVERAGE
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UFH and THAI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE 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 THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of US FOODS i.e., US FOODS and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between US FOODS and THAI BEVERAGE
Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 0.61 times more return on investment than THAI BEVERAGE. However, US FOODS HOLDING is 1.64 times less risky than THAI BEVERAGE. It trades about 0.47 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.14 per unit of risk. If you would invest 5,650 in US FOODS HOLDING on September 1, 2024 and sell it today you would earn a total of 1,050 from holding US FOODS HOLDING or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. THAI BEVERAGE
Performance |
| Timeline |
| US FOODS HOLDING |
| THAI BEVERAGE |
US FOODS and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and THAI BEVERAGE
The main advantage of trading using opposite US FOODS and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, THAI BEVERAGE 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 THAI BEVERAGE will offset losses from the drop in THAI BEVERAGE's long position.| US FOODS vs. OAKTRSPECLENDNEW | US FOODS vs. Regions Financial | US FOODS vs. Cardinal Health | US FOODS vs. Bausch Health Companies |
| THAI BEVERAGE vs. RYU Apparel | THAI BEVERAGE vs. SPORTING | THAI BEVERAGE vs. Big 5 Sporting | THAI BEVERAGE vs. COLUMBIA SPORTSWEAR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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