Correlation Between United Natural and 90331HPL1

Can any of the company-specific risk be diversified away by investing in both United Natural and 90331HPL1 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 90331HPL1 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 US BANK NATIONAL, you can compare the effects of market volatilities on United Natural and 90331HPL1 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 90331HPL1. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and 90331HPL1.

Diversification Opportunities for United Natural and 90331HPL1

-0.29

Correlation Coefficient

United Natural  90331HPL1

Very good diversification

The 3 months correlation between United and 90331HPL1 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and US BANK NATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US BANK NATIONAL 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 90331HPL1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US BANK NATIONAL has no effect on the direction of United Natural i.e., United Natural and 90331HPL1 go up and down completely randomly.

Pair Corralation between United Natural and 90331HPL1

Given the investment horizon of 90 days United Natural Foods is expected to generate 5.54 times more return on investment than 90331HPL1. However, United Natural is 5.54 times more volatile than US BANK NATIONAL. It trades about 0.17 of its potential returns per unit of risk. US BANK NATIONAL is currently generating about -0.45 per unit of risk. If you would invest  2,468  in United Natural Foods on October 8, 2024 and sell it today you would earn a total of  391.00  from holding United Natural Foods or generate 15.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.63%
Values	Daily Returns

United Natural Foods  vs.  US BANK NATIONAL

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.

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US BANK NATIONAL investors.

Pair Trading with United Natural and 90331HPL1

The main advantage of trading using opposite United Natural and 90331HPL1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, 90331HPL1 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 90331HPL1 will offset losses from the drop in 90331HPL1's long position.

The idea behind United Natural Foods and US BANK NATIONAL 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.