Correlation Between US Foods and Colabor

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

Diversification Opportunities for US Foods and Colabor

-0.76

Correlation Coefficient

US Foods  Colabor

Pay attention - limited upside

The 3 months correlation between USFD and Colabor is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and Colabor Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colabor Group 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 Colabor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colabor Group has no effect on the direction of US Foods i.e., US Foods and Colabor go up and down completely randomly.

Pair Corralation between US Foods and Colabor

Given the investment horizon of 90 days US Foods Holding is expected to under-perform the Colabor. But the stock apears to be less risky and, when comparing its historical volatility, US Foods Holding is 1.89 times less risky than Colabor. The stock trades about -0.05 of its potential returns per unit of risk. The Colabor Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Colabor Group on December 29, 2024 and sell it today you would earn a total of  7.00  from holding Colabor Group or generate 10.77% return on investment over 90 days.

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

US Foods Holding  vs.  Colabor Group

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 rather sound technical and fundamental indicators, US Foods is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Colabor Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Colabor Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Colabor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with US Foods and Colabor

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

The idea behind US Foods Holding and Colabor Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.