Correlation Between United Natural and W P

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

Diversification Opportunities for United Natural and W P

-0.09

Correlation Coefficient

United Natural  W P

Good diversification

The 3 months correlation between United and WPY is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey 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 W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of United Natural i.e., United Natural and W P go up and down completely randomly.

Pair Corralation between United Natural and W P

Assuming the 90 days horizon United Natural Foods is expected to under-perform the W P. In addition to that, United Natural is 2.54 times more volatile than W P Carey. It trades about -0.08 of its total potential returns per unit of risk. W P Carey is currently generating about 0.13 per unit of volatility. If you would invest  5,194  in W P Carey on October 12, 2024 and sell it today you would earn a total of  114.00  from holding W P Carey or generate 2.19% return on investment over 90 days.

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

United Natural Foods  vs.  W P Carey

United Natural Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Natural reported solid returns over the last few months and may actually be approaching a breakup point.

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W P Carey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, W P is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Natural and W P

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

The idea behind United Natural Foods and W P Carey 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.