Correlation Between US Foods and Performance Food
Can any of the company-specific risk be diversified away by investing in both US Foods and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on US Foods and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Foods and Performance Food.
Diversification Opportunities for US Foods and Performance Food
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UFH and Performance is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of US Foods i.e., US Foods and Performance Food go up and down completely randomly.
Pair Corralation between US Foods and Performance Food
Assuming the 90 days horizon US Foods Holding is expected to generate 0.86 times more return on investment than Performance Food. However, US Foods Holding is 1.17 times less risky than Performance Food. It trades about 0.39 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.22 per unit of risk. If you would invest 5,650 in US Foods Holding on September 3, 2024 and sell it today you would earn a total of 1,050 from holding US Foods Holding or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Foods Holding vs. Performance Food Group
Performance |
| Timeline |
| US Foods Holding |
| Performance Food |
US Foods and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Foods and Performance Food
The main advantage of trading using opposite US Foods and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Foods position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| US Foods vs. Performance Food Group | US Foods vs. Superior Plus Corp | US Foods vs. NMI Holdings | US Foods vs. Origin Agritech |
| Performance Food vs. Australian Agricultural | Performance Food vs. Sumitomo Mitsui Construction | Performance Food vs. Iridium Communications | Performance Food vs. Entravision Communications |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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