Correlation Between UDR and UNITED

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

By analyzing existing cross correlation between UDR Inc and UNITED NAT FOODS, you can compare the effects of market volatilities on UDR and UNITED 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 UDR with a short position of UNITED. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and UNITED.

Diversification Opportunities for UDR and UNITED

-0.28

Correlation Coefficient

UDR  UNITED

Very good diversification

The 3 months correlation between UDR and UNITED is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and UNITED NAT FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED NAT FOODS and UDR 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 UDR Inc are associated (or correlated) with UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED NAT FOODS has no effect on the direction of UDR i.e., UDR and UNITED go up and down completely randomly.

Pair Corralation between UDR and UNITED

Considering the 90-day investment horizon UDR Inc is expected to generate 0.72 times more return on investment than UNITED. However, UDR Inc is 1.38 times less risky than UNITED. It trades about 0.06 of its potential returns per unit of risk. UNITED NAT FOODS is currently generating about -0.15 per unit of risk. If you would invest  4,261  in UDR Inc on December 30, 2024 and sell it today you would earn a total of  193.00  from holding UDR Inc or generate 4.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

UDR Inc  vs.  UNITED NAT FOODS

UDR Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

UNITED NAT FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNITED NAT FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for UNITED NAT FOODS investors.

Pair Trading with UDR and UNITED

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

The idea behind UDR Inc and UNITED NAT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.