Correlation Between United Natural and Seaboard

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

Diversification Opportunities for United Natural and Seaboard

0.38

Correlation Coefficient

United Natural  Seaboard

Weak diversification

The 3 months correlation between United and Seaboard is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard 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 Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of United Natural i.e., United Natural and Seaboard go up and down completely randomly.

Pair Corralation between United Natural and Seaboard

Assuming the 90 days horizon United Natural Foods is expected to under-perform the Seaboard. In addition to that, United Natural is 1.3 times more volatile than Seaboard. It trades about 0.0 of its total potential returns per unit of risk. Seaboard is currently generating about 0.06 per unit of volatility. If you would invest  233,815  in Seaboard on December 22, 2024 and sell it today you would earn a total of  16,185  from holding Seaboard or generate 6.92% return on investment over 90 days.

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

United Natural Foods  vs.  Seaboard

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.

Seaboard

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seaboard are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Seaboard may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with United Natural and Seaboard

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

The idea behind United Natural Foods and Seaboard 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.