Correlation Between US Foods and HF FOODS
Can any of the company-specific risk be diversified away by investing in both US Foods and HF FOODS 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 HF FOODS 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 HF FOODS GRP, you can compare the effects of market volatilities on US Foods and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Foods and HF FOODS.
Diversification Opportunities for US Foods and HF FOODS
Very good diversification
The 3 months correlation between UFH and 3GX is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of US Foods i.e., US Foods and HF FOODS go up and down completely randomly.
Pair Corralation between US Foods and HF FOODS
Assuming the 90 days horizon US Foods Holding is expected to generate 0.45 times more return on investment than HF FOODS. However, US Foods Holding is 2.2 times less risky than HF FOODS. It trades about 0.03 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.49 per unit of risk. If you would invest 6,600 in US Foods Holding on November 27, 2024 and sell it today you would earn a total of 50.00 from holding US Foods Holding or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
US Foods Holding vs. HF FOODS GRP
Performance |
| Timeline |
| US Foods Holding |
| HF FOODS GRP |
US Foods and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Foods and HF FOODS
The main advantage of trading using opposite US Foods and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Foods position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| US Foods vs. AAC TECHNOLOGHLDGADR | US Foods vs. VELA TECHNOLPLC LS 0001 | US Foods vs. DATAGROUP SE | US Foods vs. FARO TECHNOLOGIES |
| HF FOODS vs. Playtech plc | HF FOODS vs. Playa Hotels Resorts | HF FOODS vs. SLIGRO FOOD GROUP | HF FOODS vs. Nomad Foods |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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