Correlation Between ConAgra Foods and Universal

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

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

Diversification Opportunities for ConAgra Foods and Universal

-0.47

Correlation Coefficient

ConAgra Foods  Universal

Very good diversification

The 3 months correlation between ConAgra and Universal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal and ConAgra 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 ConAgra Foods are associated (or correlated) with Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Universal go up and down completely randomly.

Pair Corralation between ConAgra Foods and Universal

Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Universal. In addition to that, ConAgra Foods is 1.1 times more volatile than Universal. It trades about -0.14 of its total potential returns per unit of risk. Universal is currently generating about 0.1 per unit of volatility. If you would invest  5,277  in Universal on September 1, 2024 and sell it today you would earn a total of  435.00  from holding Universal or generate 8.24% return on investment over 90 days.

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

ConAgra Foods  vs.  Universal

ConAgra Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConAgra Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Universal

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Universal may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ConAgra Foods and Universal

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

The idea behind ConAgra Foods and Universal 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.