Correlation Between Mamas Creations and United Natural

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

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

Diversification Opportunities for Mamas Creations and United Natural

0.4

Correlation Coefficient

Mamas Creations  United Natural

Very weak diversification

The 3 months correlation between Mamas and United is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mamas Creations 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 Mamas Creations 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 Mamas Creations 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 Mamas Creations i.e., Mamas Creations and United Natural go up and down completely randomly.

Pair Corralation between Mamas Creations and United Natural

Given the investment horizon of 90 days Mamas Creations is expected to generate 5.64 times more return on investment than United Natural. However, Mamas Creations is 5.64 times more volatile than United Natural Foods. 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  186.00  in Mamas Creations on October 10, 2024 and sell it today you would earn a total of  525.00  from holding Mamas Creations or generate 282.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.16%
Values	Daily Returns

Mamas Creations  vs.  United Natural Foods

Mamas Creations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mamas Creations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

United Natural Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, United Natural demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mamas Creations and United Natural

The main advantage of trading using opposite Mamas Creations and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mamas Creations 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 Mamas Creations 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.