Correlation Between United Natural and Truist Financial

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

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

Diversification Opportunities for United Natural and Truist Financial

0.74

Correlation Coefficient

United Natural  Truist Financial

Poor diversification

The 3 months correlation between United and Truist is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods, and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and United Natural 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 United Natural Foods, are associated (or correlated) with Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of United Natural i.e., United Natural and Truist Financial go up and down completely randomly.

Pair Corralation between United Natural and Truist Financial

Assuming the 90 days trading horizon United Natural Foods, is expected to generate 2.8 times more return on investment than Truist Financial. However, United Natural is 2.8 times more volatile than Truist Financial. It trades about 0.21 of its potential returns per unit of risk. Truist Financial is currently generating about 0.12 per unit of risk. If you would invest  2,939  in United Natural Foods, on October 6, 2024 and sell it today you would earn a total of  1,240  from holding United Natural Foods, or generate 42.19% return on investment over 90 days.

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

United Natural Foods,  vs.  Truist Financial

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.

Truist Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Truist Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Natural and Truist Financial

The main advantage of trading using opposite United Natural and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Truist Financial 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 Truist Financial will offset losses from the drop in Truist Financial's long position.

The idea behind United Natural Foods, and Truist Financial 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.