Correlation Between US FOODS and Apple

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

Diversification Opportunities for US FOODS and Apple

0.8

Correlation Coefficient

US FOODS  Apple

Very poor diversification

The 3 months correlation between UFH and Apple is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of US FOODS i.e., US FOODS and Apple go up and down completely randomly.

Pair Corralation between US FOODS and Apple

Assuming the 90 days trading horizon US FOODS HOLDING is expected to under-perform the Apple. In addition to that, US FOODS is 1.48 times more volatile than Apple Inc. It trades about -0.12 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.55 per unit of volatility. If you would invest  22,075  in Apple Inc on September 23, 2024 and sell it today you would earn a total of  2,145  from holding Apple Inc or generate 9.72% return on investment over 90 days.

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

US FOODS HOLDING  vs.  Apple Inc

US FOODS HOLDING

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US FOODS HOLDING are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, US FOODS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US FOODS and Apple

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

The idea behind US FOODS HOLDING and Apple Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.