Correlation Between US Foods and MSA Safety
Can any of the company-specific risk be diversified away by investing in both US Foods and MSA Safety 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 MSA Safety 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 MSA Safety Incorporated, you can compare the effects of market volatilities on US Foods and MSA Safety 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 MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Foods and MSA Safety.
Diversification Opportunities for US Foods and MSA Safety
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UFH and MSA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and MSA Safety Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety 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 MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of US Foods i.e., US Foods and MSA Safety go up and down completely randomly.
Pair Corralation between US Foods and MSA Safety
Assuming the 90 days horizon US Foods Holding is expected to generate 1.03 times more return on investment than MSA Safety. However, US Foods is 1.03 times more volatile than MSA Safety Incorporated. It trades about 0.09 of its potential returns per unit of risk. MSA Safety Incorporated is currently generating about 0.04 per unit of risk. If you would invest 3,480 in US Foods Holding on September 30, 2024 and sell it today you would earn a total of 3,020 from holding US Foods Holding or generate 86.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Foods Holding vs. MSA Safety Incorporated
Performance |
| Timeline |
| US Foods Holding |
| MSA Safety |
US Foods and MSA Safety Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Foods and MSA Safety
The main advantage of trading using opposite US Foods and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Foods position performs unexpectedly, MSA Safety 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 MSA Safety will offset losses from the drop in MSA Safety's long position.| US Foods vs. Sysco | US Foods vs. Jernimo Martins SGPS | US Foods vs. JERONIMO MARTINS UNADR2 | US Foods vs. Performance Food Group |
| MSA Safety vs. ABB PAR AB | MSA Safety vs. ASSA ABLOY AB | MSA Safety vs. SECOM LTD | MSA Safety vs. Halma plc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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