Correlation Between US Foods and McCormick Company

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

Diversification Opportunities for US Foods and McCormick Company

0.52

Correlation Coefficient

US Foods  McCormick Company

Very weak diversification

The 3 months correlation between USFD and McCormick is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding US Foods Holding and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company 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 McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of US Foods i.e., US Foods and McCormick Company go up and down completely randomly.

Pair Corralation between US Foods and McCormick Company

Given the investment horizon of 90 days US Foods Holding is expected to under-perform the McCormick Company. But the stock apears to be less risky and, when comparing its historical volatility, US Foods Holding is 1.14 times less risky than McCormick Company. The stock trades about -0.16 of its potential returns per unit of risk. The McCormick Company Incorporated is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  6,967  in McCormick Company Incorporated on August 2, 2025 and sell it today you would lose (551.00) from holding McCormick Company Incorporated or give up 7.91% of portfolio value over 90 days.

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

US Foods Holding  vs.  McCormick Company Incorporated

US Foods Holding

Risk-Adjusted Performance

Weakest

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

McCormick Company

Risk-Adjusted Performance

Weakest

Over the last 90 days McCormick Company Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with US Foods and McCormick Company

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

The idea behind US Foods Holding and McCormick Company Incorporated 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.