Correlation Between US FOODS and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both US FOODS and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on US FOODS and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and Treasury Wine.
Diversification Opportunities for US FOODS and Treasury Wine
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UFH and Treasury is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of US FOODS i.e., US FOODS and Treasury Wine go up and down completely randomly.
Pair Corralation between US FOODS and Treasury Wine
Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 0.69 times more return on investment than Treasury Wine. However, US FOODS HOLDING is 1.46 times less risky than Treasury Wine. It trades about 0.3 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.08 per unit of risk. If you would invest 6,450 in US FOODS HOLDING on November 7, 2024 and sell it today you would earn a total of 400.00 from holding US FOODS HOLDING or generate 6.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. Treasury Wine Estates
Performance |
| Timeline |
| US FOODS HOLDING |
| Treasury Wine Estates |
US FOODS and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and Treasury Wine
The main advantage of trading using opposite US FOODS and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| US FOODS vs. ON SEMICONDUCTOR | US FOODS vs. ADRIATIC METALS LS 013355 | US FOODS vs. BE Semiconductor Industries | US FOODS vs. DAIDO METAL TD |
| Treasury Wine vs. Diageo plc | Treasury Wine vs. Pernod Ricard SA | Treasury Wine vs. Constellation Brands | Treasury Wine vs. Brown Forman |
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.
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