Correlation Between Jerónimo Martins and United Natural

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

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

Diversification Opportunities for Jerónimo Martins and United Natural

0.24

Correlation Coefficient

Jerónimo Martins  United Natural

Modest diversification

The 3 months correlation between Jerónimo and United is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Jernimo Martins SGPS 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 Jerónimo Martins 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 Jernimo Martins SGPS 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 Jerónimo Martins i.e., Jerónimo Martins and United Natural go up and down completely randomly.

Pair Corralation between Jerónimo Martins and United Natural

Assuming the 90 days horizon Jernimo Martins SGPS is expected to generate 0.51 times more return on investment than United Natural. However, Jernimo Martins SGPS is 1.95 times less risky than United Natural. It trades about 0.07 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.0 per unit of risk. If you would invest  1,806  in Jernimo Martins SGPS on December 30, 2024 and sell it today you would earn a total of  129.00  from holding Jernimo Martins SGPS or generate 7.14% return on investment over 90 days.

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

Jernimo Martins SGPS  vs.  United Natural Foods

Jernimo Martins SGPS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jernimo Martins SGPS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jerónimo Martins may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 nearly stable basic indicators, United Natural is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jerónimo Martins and United Natural

The main advantage of trading using opposite Jerónimo Martins and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jerónimo Martins 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 Jernimo Martins SGPS 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.