Correlation Between United Natural and TG Venture

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

Diversification Opportunities for United Natural and TG Venture

-0.12

Correlation Coefficient

United Natural  TG Venture

Good diversification

The 3 months correlation between United and TGVCU is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and TG Venture Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TG Venture Acquisition 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 TG Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TG Venture Acquisition has no effect on the direction of United Natural i.e., United Natural and TG Venture go up and down completely randomly.

Pair Corralation between United Natural and TG Venture

Given the investment horizon of 90 days United Natural Foods is expected to generate 4.38 times more return on investment than TG Venture. However, United Natural is 4.38 times more volatile than TG Venture Acquisition. It trades about 0.0 of its potential returns per unit of risk. TG Venture Acquisition is currently generating about -0.04 per unit of risk. If you would invest  3,957  in United Natural Foods on October 9, 2024 and sell it today you would lose (1,147) from holding United Natural Foods or give up 28.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.86%
Values	Daily Returns

United Natural Foods  vs.  TG Venture Acquisition

United Natural Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, United Natural demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TG Venture Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TG Venture Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, TG Venture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Natural and TG Venture

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

The idea behind United Natural Foods and TG Venture Acquisition 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 Valuation module to check real value of public entities based on technical and fundamental data.