Correlation Between US Foods and United Natural
Can any of the company-specific risk be diversified away by investing in both US Foods and United Natural 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 United Natural 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 United Natural Foods, you can compare the effects of market volatilities on US Foods and United Natural 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 United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Foods and United Natural.
Diversification Opportunities for US Foods and United Natural
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UFH and United is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods 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 United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of US Foods i.e., US Foods and United Natural go up and down completely randomly.
Pair Corralation between US Foods and United Natural
Assuming the 90 days horizon US Foods Holding is expected to generate 0.39 times more return on investment than United Natural. However, US Foods Holding is 2.58 times less risky than United Natural. It trades about 0.11 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.02 per unit of risk. If you would invest 3,860 in US Foods Holding on August 31, 2024 and sell it today you would earn a total of 2,940 from holding US Foods Holding or generate 76.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
US Foods Holding vs. United Natural Foods
Performance |
| Timeline |
| US Foods Holding |
| United Natural Foods |
US Foods and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Foods and United Natural
The main advantage of trading using opposite US Foods and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Foods position performs unexpectedly, United Natural 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 United Natural will offset losses from the drop in United Natural's long position.| US Foods vs. DICKER DATA LTD | US Foods vs. Lion One Metals | US Foods vs. MICRONIC MYDATA | US Foods vs. Jacquet Metal Service |
| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |