Correlation Between US FOODS and Treasury Wine

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

Diversification Opportunities for US FOODS and Treasury Wine

0.12

Correlation Coefficient

US FOODS  Treasury Wine

Average diversification

The 3 months correlation between UFH and Treasury is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of US FOODS i.e., US FOODS and Treasury Wine go up and down completely randomly.

Pair Corralation between US FOODS and Treasury Wine

Assuming the 90 days trading horizon US FOODS HOLDING is expected to generate 0.79 times more return on investment than Treasury Wine. However, US FOODS HOLDING is 1.27 times less risky than Treasury Wine. It trades about -0.12 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.12 per unit of risk. If you would invest  6,500  in US FOODS HOLDING on December 21, 2024 and sell it today you would lose (650.00) from holding US FOODS HOLDING or give up 10.0% of portfolio value over 90 days.

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

US FOODS HOLDING  vs.  Treasury Wine Estates

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.

Treasury Wine Estates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with US FOODS and Treasury Wine

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

The idea behind US FOODS HOLDING and Treasury Wine Estates 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.