Correlation Between United Natural and Hf Foods

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

Diversification Opportunities for United Natural and Hf Foods

-0.27

Correlation Coefficient

United Natural  Hf Foods

Very good diversification

The 3 months correlation between United and HFFG is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group 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 Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of United Natural i.e., United Natural and Hf Foods go up and down completely randomly.

Pair Corralation between United Natural and Hf Foods

Given the investment horizon of 90 days United Natural Foods is expected to generate 0.58 times more return on investment than Hf Foods. However, United Natural Foods is 1.73 times less risky than Hf Foods. It trades about 0.01 of its potential returns per unit of risk. Hf Foods Group is currently generating about -0.03 per unit of risk. If you would invest  2,621  in United Natural Foods on December 19, 2024 and sell it today you would lose (7.00) from holding United Natural Foods or give up 0.27% of portfolio value over 90 days.

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

United Natural Foods  vs.  Hf Foods Group

United Natural Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, United Natural is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Hf Foods Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hf Foods Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with United Natural and Hf Foods

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

The idea behind United Natural Foods and Hf Foods Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.