Correlation Between Mission Produce and US Foods

Can any of the company-specific risk be diversified away by investing in both Mission Produce and US Foods 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 Mission Produce and US Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mission Produce and US Foods Holding, you can compare the effects of market volatilities on Mission Produce and US Foods 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 Mission Produce with a short position of US Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mission Produce and US Foods.

Diversification Opportunities for Mission Produce and US Foods

0.63

Correlation Coefficient

Mission Produce  US Foods

Poor diversification

The 3 months correlation between Mission and USFD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mission Produce and US Foods Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Foods Holding and Mission Produce 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 Mission Produce are associated (or correlated) with US Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Foods Holding has no effect on the direction of Mission Produce i.e., Mission Produce and US Foods go up and down completely randomly.

Pair Corralation between Mission Produce and US Foods

Considering the 90-day investment horizon Mission Produce is expected to generate 2.61 times more return on investment than US Foods. However, Mission Produce is 2.61 times more volatile than US Foods Holding. It trades about 0.12 of its potential returns per unit of risk. US Foods Holding is currently generating about 0.22 per unit of risk. If you would invest  1,064  in Mission Produce on August 31, 2024 and sell it today you would earn a total of  266.00  from holding Mission Produce or generate 25.0% return on investment over 90 days.

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

Mission Produce  vs.  US Foods Holding

Mission Produce

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mission Produce are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Mission Produce displayed solid returns over the last few months and may actually be approaching a breakup point.

US Foods Holding

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Foods Holding are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, US Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mission Produce and US Foods

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

The idea behind Mission Produce and US Foods Holding 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..