Correlation Between US FOODS and Corporate Office
Can any of the company-specific risk be diversified away by investing in both US FOODS and Corporate Office 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 Corporate Office 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 Corporate Office Properties, you can compare the effects of market volatilities on US FOODS and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and Corporate Office.
Diversification Opportunities for US FOODS and Corporate Office
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UFH and Corporate is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of US FOODS i.e., US FOODS and Corporate Office go up and down completely randomly.
Pair Corralation between US FOODS and Corporate Office
Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 1.01 times more return on investment than Corporate Office. However, US FOODS is 1.01 times more volatile than Corporate Office Properties. It trades about 0.42 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.08 per unit of risk. If you would invest 5,700 in US FOODS HOLDING on August 30, 2024 and sell it today you would earn a total of 950.00 from holding US FOODS HOLDING or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. Corporate Office Properties
Performance |
| Timeline |
| US FOODS HOLDING |
| Corporate Office Pro |
US FOODS and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and Corporate Office
The main advantage of trading using opposite US FOODS and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| US FOODS vs. Apple Inc | US FOODS vs. Apple Inc | US FOODS vs. Superior Plus Corp | US FOODS vs. SIVERS SEMICONDUCTORS AB |
| Corporate Office vs. Superior Plus Corp | Corporate Office vs. NMI Holdings | Corporate Office vs. SIVERS SEMICONDUCTORS AB | Corporate Office vs. Talanx AG |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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