Correlation Between Elevance Health, and United Natural

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

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

Diversification Opportunities for Elevance Health, and United Natural

-0.34

Correlation Coefficient

Elevance Health,  United Natural

Very good diversification

The 3 months correlation between Elevance and United is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health, 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 Elevance Health, 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 Elevance Health, 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 Elevance Health, i.e., Elevance Health, and United Natural go up and down completely randomly.

Pair Corralation between Elevance Health, and United Natural

Assuming the 90 days trading horizon Elevance Health, is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Elevance Health, is 2.3 times less risky than United Natural. The stock trades about -0.12 of its potential returns per unit of risk. The United Natural Foods, is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,633  in United Natural Foods, on October 7, 2024 and sell it today you would earn a total of  1,546  from holding United Natural Foods, or generate 58.72% return on investment over 90 days.

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

Elevance Health,  vs.  United Natural Foods,

Elevance Health,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevance Health, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

United Natural Foods,

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United Natural sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elevance Health, and United Natural

The main advantage of trading using opposite Elevance Health, and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevance Health, 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 Elevance Health, 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.