Correlation Between US Foods and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both US Foods and Bunzl Plc 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 Bunzl Plc 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 Bunzl plc, you can compare the effects of market volatilities on US Foods and Bunzl Plc 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 Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Foods and Bunzl Plc.
Diversification Opportunities for US Foods and Bunzl Plc
Good diversification
The 3 months correlation between UFH and Bunzl is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc 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 Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of US Foods i.e., US Foods and Bunzl Plc go up and down completely randomly.
Pair Corralation between US Foods and Bunzl Plc
Assuming the 90 days horizon US Foods Holding is expected to generate 1.15 times more return on investment than Bunzl Plc. However, US Foods is 1.15 times more volatile than Bunzl plc. It trades about 0.14 of its potential returns per unit of risk. Bunzl plc is currently generating about -0.03 per unit of risk. If you would invest 6,100 in US Foods Holding on October 19, 2024 and sell it today you would earn a total of 500.00 from holding US Foods Holding or generate 8.2% 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. Bunzl plc
Performance |
| Timeline |
| US Foods Holding |
| Bunzl plc |
US Foods and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Foods and Bunzl Plc
The main advantage of trading using opposite US Foods and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Foods position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| US Foods vs. Sysco | US Foods vs. Jernimo Martins SGPS | US Foods vs. Bunzl plc | US Foods vs. JERONIMO MARTINS UNADR2 |
| Bunzl Plc vs. Sysco | Bunzl Plc vs. Jernimo Martins SGPS | Bunzl Plc vs. JERONIMO MARTINS UNADR2 | Bunzl Plc vs. Performance Food Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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