Correlation Between Science Applications and US FOODS

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

By analyzing existing cross correlation between Science Applications International and US FOODS HOLDING, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of US FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and US FOODS.

Diversification Opportunities for Science Applications and US FOODS

-0.45

Correlation Coefficient

Science Applications  US FOODS

Very good diversification

The 3 months correlation between Science and UFH is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati 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 Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and US FOODS go up and down completely randomly.

Pair Corralation between Science Applications and US FOODS

Assuming the 90 days trading horizon Science Applications International is expected to under-perform the US FOODS. In addition to that, Science Applications is 1.61 times more volatile than US FOODS HOLDING. It trades about -0.23 of its total potential returns per unit of risk. US FOODS HOLDING is currently generating about -0.12 per unit of volatility. If you would invest  6,750  in US FOODS HOLDING on October 4, 2024 and sell it today you would lose (150.00) from holding US FOODS HOLDING or give up 2.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Science Applications Internati  vs.  US FOODS HOLDING

Science Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Science Applications International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

US FOODS HOLDING

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US FOODS HOLDING are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, US FOODS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Science Applications and US FOODS

The main advantage of trading using opposite Science Applications and US FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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's long position.

The idea behind Science Applications International 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.