Correlation Between United Natural and YDUQ3F

Can any of the company-specific risk be diversified away by investing in both United Natural and YDUQ3F 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 YDUQ3F 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 YDUQ3F, you can compare the effects of market volatilities on United Natural and YDUQ3F 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 YDUQ3F. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and YDUQ3F.

Diversification Opportunities for United Natural and YDUQ3F

0.06

Correlation Coefficient

United Natural  YDUQ3F

Significant diversification

The 3 months correlation between United and YDUQ3F is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods, and YDUQ3F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YDUQ3F 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 YDUQ3F. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YDUQ3F has no effect on the direction of United Natural i.e., United Natural and YDUQ3F go up and down completely randomly.

Pair Corralation between United Natural and YDUQ3F

Assuming the 90 days trading horizon United Natural Foods, is expected to under-perform the YDUQ3F. But the stock apears to be less risky and, when comparing its historical volatility, United Natural Foods, is 1.09 times less risky than YDUQ3F. The stock trades about -0.05 of its potential returns per unit of risk. The YDUQ3F is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  833.00  in YDUQ3F on December 24, 2024 and sell it today you would earn a total of  352.00  from holding YDUQ3F or generate 42.26% return on investment over 90 days.

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

United Natural Foods,  vs.  YDUQ3F

United Natural Foods,

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Natural Foods, 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.

YDUQ3F

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YDUQ3F are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YDUQ3F sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Natural and YDUQ3F

The main advantage of trading using opposite United Natural and YDUQ3F positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, YDUQ3F 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 YDUQ3F will offset losses from the drop in YDUQ3F's long position.

The idea behind United Natural Foods, and YDUQ3F 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.