Correlation Between Krispy Kreme and US Foods

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

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

Diversification Opportunities for Krispy Kreme and US Foods

0.71

Correlation Coefficient

Krispy Kreme  US Foods

Poor diversification

The 3 months correlation between Krispy and USFD is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme 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 Krispy Kreme 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 Krispy Kreme 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 Krispy Kreme i.e., Krispy Kreme and US Foods go up and down completely randomly.

Pair Corralation between Krispy Kreme and US Foods

Given the investment horizon of 90 days Krispy Kreme is expected to generate 4.03 times more return on investment than US Foods. However, Krispy Kreme is 4.03 times more volatile than US Foods Holding. It trades about 0.05 of its potential returns per unit of risk. US Foods Holding is currently generating about 0.04 per unit of risk. If you would invest  317.00  in Krispy Kreme on May 16, 2025 and sell it today you would earn a total of  23.00  from holding Krispy Kreme or generate 7.26% return on investment over 90 days.

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

Krispy Kreme  vs.  US Foods Holding

Krispy Kreme

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Krispy Kreme are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Krispy Kreme unveiled solid returns over the last few months and may actually be approaching a breakup point.

US Foods Holding

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in US Foods Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Krispy Kreme and US Foods

The main advantage of trading using opposite Krispy Kreme and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme 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 Krispy Kreme 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.