Correlation Between QUEEN S and US Foods

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

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

Diversification Opportunities for QUEEN S and US Foods

0.41

Correlation Coefficient

QUEEN S  US Foods

Very weak diversification

The 3 months correlation between QUEEN and UFH is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding QUEEN S ROAD 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 QUEEN S 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 QUEEN S ROAD 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 QUEEN S i.e., QUEEN S and US Foods go up and down completely randomly.

Pair Corralation between QUEEN S and US Foods

Assuming the 90 days horizon QUEEN S is expected to generate 1.69 times less return on investment than US Foods. In addition to that, QUEEN S is 2.67 times more volatile than US Foods Holding. It trades about 0.02 of its total potential returns per unit of risk. US Foods Holding is currently generating about 0.1 per unit of volatility. If you would invest  3,360  in US Foods Holding on October 5, 2024 and sell it today you would earn a total of  3,140  from holding US Foods Holding or generate 93.45% return on investment over 90 days.

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

QUEEN S ROAD  vs.  US Foods Holding

QUEEN S ROAD

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days QUEEN S ROAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, QUEEN S may actually be approaching a critical reversion point that can send shares even higher in February 2025.

US Foods Holding

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days US Foods Holding has generated negative risk-adjusted returns adding no value to investors with long positions. 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 QUEEN S and US Foods

The main advantage of trading using opposite QUEEN S and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QUEEN S 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 QUEEN S ROAD 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.