Correlation Between United Natural and 694308JU2

Can any of the company-specific risk be diversified away by investing in both United Natural and 694308JU2 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 694308JU2 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 PCG 42 01 JUN 41, you can compare the effects of market volatilities on United Natural and 694308JU2 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 694308JU2. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and 694308JU2.

Diversification Opportunities for United Natural and 694308JU2

-0.06

Correlation Coefficient

United Natural  694308JU2

Good diversification

The 3 months correlation between United and 694308JU2 is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and PCG 42 01 JUN 41 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 42 01 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 694308JU2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 42 01 has no effect on the direction of United Natural i.e., United Natural and 694308JU2 go up and down completely randomly.

Pair Corralation between United Natural and 694308JU2

Given the investment horizon of 90 days United Natural Foods is expected to generate 3.77 times more return on investment than 694308JU2. However, United Natural is 3.77 times more volatile than PCG 42 01 JUN 41. It trades about 0.0 of its potential returns per unit of risk. PCG 42 01 JUN 41 is currently generating about -0.12 per unit of risk. If you would invest  2,681  in United Natural Foods on December 24, 2024 and sell it today you would lose (62.00) from holding United Natural Foods or give up 2.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.41%
Values	Daily Returns

United Natural Foods  vs.  PCG 42 01 JUN 41

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.

PCG 42 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days PCG 42 01 JUN 41 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308JU2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Natural and 694308JU2

The main advantage of trading using opposite United Natural and 694308JU2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, 694308JU2 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 694308JU2 will offset losses from the drop in 694308JU2's long position.

The idea behind United Natural Foods and PCG 42 01 JUN 41 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.