Correlation Between US FOODS and MONEYSUPERMARKET

Can any of the company-specific risk be diversified away by investing in both US FOODS and MONEYSUPERMARKET 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 MONEYSUPERMARKET 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 MONEYSUPERMARKET, you can compare the effects of market volatilities on US FOODS and MONEYSUPERMARKET 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 MONEYSUPERMARKET. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and MONEYSUPERMARKET.

Diversification Opportunities for US FOODS and MONEYSUPERMARKET

-0.41

Correlation Coefficient

US FOODS  MONEYSUPERMARKET

Very good diversification

The 3 months correlation between UFH and MONEYSUPERMARKET is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and MONEYSUPERMARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONEYSUPERMARKET 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 MONEYSUPERMARKET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONEYSUPERMARKET has no effect on the direction of US FOODS i.e., US FOODS and MONEYSUPERMARKET go up and down completely randomly.

Pair Corralation between US FOODS and MONEYSUPERMARKET

Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 0.84 times more return on investment than MONEYSUPERMARKET. However, US FOODS HOLDING is 1.19 times less risky than MONEYSUPERMARKET. It trades about 0.17 of its potential returns per unit of risk. MONEYSUPERMARKET is currently generating about -0.05 per unit of risk. If you would invest  5,300  in US FOODS HOLDING on October 3, 2024 and sell it today you would earn a total of  1,200  from holding US FOODS HOLDING or generate 22.64% return on investment over 90 days.

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

US FOODS HOLDING  vs.  MONEYSUPERMARKET

US FOODS HOLDING

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US FOODS HOLDING are ranked lower than 15 (%) 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.

MONEYSUPERMARKET

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MONEYSUPERMARKET has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with US FOODS and MONEYSUPERMARKET

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

The idea behind US FOODS HOLDING and MONEYSUPERMARKET 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 Commodity Directory module to find actively traded commodities issued by global exchanges.