Correlation Between United Natural and GWILLI FOOD

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

Diversification Opportunities for United Natural and GWILLI FOOD

0.69

Correlation Coefficient

United Natural  GWILLI FOOD

Poor diversification

The 3 months correlation between United and GWILLI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD 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 GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of United Natural i.e., United Natural and GWILLI FOOD go up and down completely randomly.

Pair Corralation between United Natural and GWILLI FOOD

Assuming the 90 days horizon United Natural Foods is expected to generate 1.84 times more return on investment than GWILLI FOOD. However, United Natural is 1.84 times more volatile than GWILLI FOOD. It trades about 0.01 of its potential returns per unit of risk. GWILLI FOOD is currently generating about -0.06 per unit of risk. If you would invest  2,429  in United Natural Foods on December 21, 2024 and sell it today you would lose (52.00) from holding United Natural Foods or give up 2.14% of portfolio value over 90 days.

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

United Natural Foods  vs.  GWILLI FOOD

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 nearly stable basic indicators, United Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GWILLI FOOD

Risk-Adjusted Performance

Very Weak

Over the last 90 days GWILLI FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with United Natural and GWILLI FOOD

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

The idea behind United Natural Foods and GWILLI FOOD 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.