Correlation Between Top Frontier and United Natural

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

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

Diversification Opportunities for Top Frontier and United Natural

-0.45

Correlation Coefficient

Top Frontier  United Natural

Very good diversification

The 3 months correlation between Top and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment 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 Top Frontier 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 Top Frontier Investment 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 Top Frontier i.e., Top Frontier and United Natural go up and down completely randomly.

Pair Corralation between Top Frontier and United Natural

Assuming the 90 days horizon Top Frontier Investment is expected to under-perform the United Natural. In addition to that, Top Frontier is 1.75 times more volatile than United Natural Foods. It trades about -0.13 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  2,621  in United Natural Foods on December 19, 2024 and sell it today you would lose (7.00) from holding United Natural Foods or give up 0.27% of portfolio value over 90 days.

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

Top Frontier Investment  vs.  United Natural Foods

Top Frontier Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

United Natural Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Top Frontier and United Natural

The main advantage of trading using opposite Top Frontier and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier 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 Top Frontier Investment 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.