Correlation Between United Natural and STRAYER EDUCATION

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

Diversification Opportunities for United Natural and STRAYER EDUCATION

0.73

Correlation Coefficient

United Natural  STRAYER EDUCATION

Poor diversification

The 3 months correlation between United and STRAYER is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of United Natural i.e., United Natural and STRAYER EDUCATION go up and down completely randomly.

Pair Corralation between United Natural and STRAYER EDUCATION

Assuming the 90 days horizon United Natural Foods is expected to generate 1.24 times more return on investment than STRAYER EDUCATION. However, United Natural is 1.24 times more volatile than STRAYER EDUCATION. It trades about 0.0 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about -0.05 per unit of risk. If you would invest  2,531  in United Natural Foods on December 30, 2024 and sell it today you would lose (81.00) from holding United Natural Foods or give up 3.2% 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.  STRAYER EDUCATION

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

STRAYER EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days STRAYER EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental 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 STRAYER EDUCATION

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

The idea behind United Natural Foods and STRAYER EDUCATION 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.