Correlation Between US FOODS and Fiskars Oyj

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

Diversification Opportunities for US FOODS and Fiskars Oyj

-0.37

Correlation Coefficient

US FOODS  Fiskars Oyj

Very good diversification

The 3 months correlation between UFH and Fiskars is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and Fiskars Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiskars Oyj Abp 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 Fiskars Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiskars Oyj Abp has no effect on the direction of US FOODS i.e., US FOODS and Fiskars Oyj go up and down completely randomly.

Pair Corralation between US FOODS and Fiskars Oyj

Assuming the 90 days trading horizon US FOODS HOLDING is expected to under-perform the Fiskars Oyj. But the stock apears to be less risky and, when comparing its historical volatility, US FOODS HOLDING is 1.29 times less risky than Fiskars Oyj. The stock trades about -0.12 of its potential returns per unit of risk. The Fiskars Oyj Abp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,394  in Fiskars Oyj Abp on December 21, 2024 and sell it today you would earn a total of  204.00  from holding Fiskars Oyj Abp or generate 14.63% return on investment over 90 days.

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

US FOODS HOLDING  vs.  Fiskars Oyj Abp

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 latest fragile performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fiskars Oyj Abp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fiskars Oyj Abp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Fiskars Oyj reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US FOODS and Fiskars Oyj

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

The idea behind US FOODS HOLDING and Fiskars Oyj Abp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.