Correlation Between United Natural and CRISPR Therapeutics

Can any of the company-specific risk be diversified away by investing in both United Natural and CRISPR Therapeutics 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 CRISPR Therapeutics 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 CRISPR Therapeutics AG, you can compare the effects of market volatilities on United Natural and CRISPR Therapeutics 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 CRISPR Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and CRISPR Therapeutics.

Diversification Opportunities for United Natural and CRISPR Therapeutics

-0.34

Correlation Coefficient

United Natural  CRISPR Therapeutics

Very good diversification

The 3 months correlation between United and CRISPR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods, and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics 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 CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of United Natural i.e., United Natural and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between United Natural and CRISPR Therapeutics

Assuming the 90 days trading horizon United Natural Foods, is expected to generate 1.26 times more return on investment than CRISPR Therapeutics. However, United Natural is 1.26 times more volatile than CRISPR Therapeutics AG. It trades about 0.16 of its potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about -0.04 per unit of risk. If you would invest  2,934  in United Natural Foods, on October 23, 2024 and sell it today you would earn a total of  1,206  from holding United Natural Foods, or generate 41.1% return on investment over 90 days.

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

United Natural Foods,  vs.  CRISPR Therapeutics AG

United Natural Foods,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods, are ranked lower than 12 (%) 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.

CRISPR Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Natural and CRISPR Therapeutics

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

The idea behind United Natural Foods, and CRISPR Therapeutics AG 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.