Correlation Between US Foods and ResMed

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

Diversification Opportunities for US Foods and ResMed

0.66

Correlation Coefficient

US Foods  ResMed

Poor diversification

The 3 months correlation between UFH and ResMed is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed 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 ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of US Foods i.e., US Foods and ResMed go up and down completely randomly.

Pair Corralation between US Foods and ResMed

Assuming the 90 days horizon US Foods Holding is expected to under-perform the ResMed. But the stock apears to be less risky and, when comparing its historical volatility, US Foods Holding is 1.38 times less risky than ResMed. The stock trades about -0.11 of its potential returns per unit of risk. The ResMed Inc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  22,260  in ResMed Inc on December 25, 2024 and sell it today you would lose (2,120) from holding ResMed Inc or give up 9.52% of portfolio value over 90 days.

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

US Foods Holding  vs.  ResMed Inc

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ResMed Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ResMed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with US Foods and ResMed

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

The idea behind US Foods Holding and ResMed 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.