Correlation Between US Foods and Kemper

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

Diversification Opportunities for US Foods and Kemper

0.0

Correlation Coefficient

US Foods  Kemper

Pay attention - limited upside

The 3 months correlation between UFH and Kemper is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper 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 Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of US Foods i.e., US Foods and Kemper go up and down completely randomly.

Pair Corralation between US Foods and Kemper

If you would invest  4,306  in Kemper on October 2, 2024 and sell it today you would earn a total of  1,844  from holding Kemper or generate 42.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

US Foods Holding  vs.  Kemper

US Foods Holding

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days US Foods Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, US Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Kemper

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Kemper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Foods and Kemper

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

The idea behind US Foods Holding and Kemper 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.