Correlation Between Materialise and US Foods

Can any of the company-specific risk be diversified away by investing in both Materialise and US Foods 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 Materialise and US Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Materialise NV and US Foods Holding, you can compare the effects of market volatilities on Materialise and US Foods 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 Materialise with a short position of US Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and US Foods.

Diversification Opportunities for Materialise and US Foods

0.92

Correlation Coefficient

Materialise  US Foods

Almost no diversification

The 3 months correlation between Materialise and UFH is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and US Foods Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Foods Holding and Materialise 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 Materialise NV are associated (or correlated) with US Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Foods Holding has no effect on the direction of Materialise i.e., Materialise and US Foods go up and down completely randomly.

Pair Corralation between Materialise and US Foods

Assuming the 90 days trading horizon Materialise NV is expected to under-perform the US Foods. In addition to that, Materialise is 1.99 times more volatile than US Foods Holding. It trades about 0.0 of its total potential returns per unit of risk. US Foods Holding is currently generating about 0.09 per unit of volatility. If you would invest  3,400  in US Foods Holding on October 4, 2024 and sell it today you would earn a total of  3,100  from holding US Foods Holding or generate 91.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Materialise NV  vs.  US Foods Holding

Materialise NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

US Foods Holding

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Foods Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, US Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materialise and US Foods

The main advantage of trading using opposite Materialise and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, US Foods 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 US Foods will offset losses from the drop in US Foods' long position.

The idea behind Materialise NV and US Foods Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.