Correlation Between US Foods and Sysco
Can any of the company-specific risk be diversified away by investing in both US Foods and Sysco 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 Sysco 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 Sysco, you can compare the effects of market volatilities on US Foods and Sysco 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 Sysco. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Foods and Sysco.
Diversification Opportunities for US Foods and Sysco
Good diversification
The 3 months correlation between USFD and Sysco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco 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 Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of US Foods i.e., US Foods and Sysco go up and down completely randomly.
Pair Corralation between US Foods and Sysco
Given the investment horizon of 90 days US Foods Holding is expected to generate 1.23 times more return on investment than Sysco. However, US Foods is 1.23 times more volatile than Sysco. It trades about 0.1 of its potential returns per unit of risk. Sysco is currently generating about 0.02 per unit of risk. If you would invest 4,364 in US Foods Holding on August 28, 2024 and sell it today you would earn a total of 2,625 from holding US Foods Holding or generate 60.15% 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. Sysco
Performance |
| Timeline |
| US Foods Holding |
| Sysco |
US Foods and Sysco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Foods and Sysco
The main advantage of trading using opposite US Foods and Sysco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Foods position performs unexpectedly, Sysco 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 Sysco will offset losses from the drop in Sysco's long position.| US Foods vs. The Chefs Warehouse | US Foods vs. Sysco | US Foods vs. SpartanNash Co | US Foods vs. Calavo Growers |
| Sysco vs. Performance Food Group | Sysco vs. The Chefs Warehouse | Sysco vs. United Natural Foods | Sysco vs. Calavo Growers |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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