Correlation Between AMCON Distributing and United Natural

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

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

Diversification Opportunities for AMCON Distributing and United Natural

0.34

Correlation Coefficient

AMCON Distributing  United Natural

Weak diversification

The 3 months correlation between AMCON and United is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and United Natural go up and down completely randomly.

Pair Corralation between AMCON Distributing and United Natural

Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the United Natural. In addition to that, AMCON Distributing is 1.4 times more volatile than United Natural Foods. It trades about -0.02 of its total potential returns per unit of risk. United Natural Foods is currently generating about 0.01 per unit of volatility. If you would invest  2,720  in United Natural Foods on December 28, 2024 and sell it today you would lose (23.00) from holding United Natural Foods or give up 0.85% of portfolio value over 90 days.

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

AMCON Distributing  vs.  United Natural Foods

AMCON Distributing

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

United Natural Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Natural Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, United Natural is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AMCON Distributing and United Natural

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

The idea behind AMCON Distributing and United Natural Foods 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.