Correlation Between United Natural and Performance Food

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

Diversification Opportunities for United Natural and Performance Food

0.52

Correlation Coefficient

United Natural  Performance Food

Very weak diversification

The 3 months correlation between United and Performance is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of United Natural i.e., United Natural and Performance Food go up and down completely randomly.

Pair Corralation between United Natural and Performance Food

Given the investment horizon of 90 days United Natural Foods is expected to generate 1.89 times more return on investment than Performance Food. However, United Natural is 1.89 times more volatile than Performance Food Group. It trades about 0.01 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.08 per unit of risk. If you would invest  2,720  in United Natural Foods on December 30, 2024 and sell it today you would lose (50.00) from holding United Natural Foods or give up 1.84% of portfolio value over 90 days.

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

United Natural Foods  vs.  Performance Food Group

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 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.

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Performance Food

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

The idea behind United Natural Foods and Performance Food 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.