Correlation Between Hospital Mater and United Natural

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

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

Diversification Opportunities for Hospital Mater and United Natural

-0.72

Correlation Coefficient

Hospital Mater  United Natural

Pay attention - limited upside

The 3 months correlation between Hospital and United is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hospital Mater Dei 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 Hospital Mater 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 Hospital Mater Dei 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 Hospital Mater i.e., Hospital Mater and United Natural go up and down completely randomly.

Pair Corralation between Hospital Mater and United Natural

Assuming the 90 days trading horizon Hospital Mater Dei is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Hospital Mater Dei is 1.75 times less risky than United Natural. The stock trades about -0.09 of its potential returns per unit of risk. The United Natural Foods, is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,818  in United Natural Foods, on October 8, 2024 and sell it today you would earn a total of  1,361  from holding United Natural Foods, or generate 48.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	22.22%
Values	Daily Returns

Hospital Mater Dei  vs.  United Natural Foods,

Hospital Mater Dei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hospital Mater Dei has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 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 Hospital Mater and United Natural

The main advantage of trading using opposite Hospital Mater and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hospital Mater 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 Hospital Mater Dei 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.