Correlation Between Organto Foods and US Foods

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

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

Diversification Opportunities for Organto Foods and US Foods

-0.16

Correlation Coefficient

Organto Foods  US Foods

Good diversification

The 3 months correlation between Organto and USFD is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Organto Foods 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 Organto 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 Organto Foods 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 Organto Foods i.e., Organto Foods and US Foods go up and down completely randomly.

Pair Corralation between Organto Foods and US Foods

Assuming the 90 days horizon Organto Foods is expected to generate 78.93 times more return on investment than US Foods. However, Organto Foods is 78.93 times more volatile than US Foods Holding. It trades about 0.17 of its potential returns per unit of risk. US Foods Holding is currently generating about -0.05 per unit of risk. If you would invest  1.01  in Organto Foods on December 29, 2024 and sell it today you would earn a total of  9.99  from holding Organto Foods or generate 989.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Organto Foods  vs.  US Foods Holding

Organto Foods

Risk-Adjusted Performance

Good

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

US Foods Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Foods Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, US Foods is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Organto Foods and US Foods

The main advantage of trading using opposite Organto Foods and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Organto Foods 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 Organto Foods 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.