Correlation Between Banco and United Natural

Can any of the company-specific risk be diversified away by investing in both Banco and United Natural 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 Banco and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Santander SA and United Natural Foods, you can compare the effects of market volatilities on Banco and United Natural 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 Banco with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco and United Natural.

Diversification Opportunities for Banco and United Natural

-0.38

Correlation Coefficient

Banco  United Natural

Very good diversification

The 3 months correlation between Banco and United is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods and Banco 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 Banco Santander SA are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of Banco i.e., Banco and United Natural go up and down completely randomly.

Pair Corralation between Banco and United Natural

Assuming the 90 days trading horizon Banco Santander SA is expected to generate 0.53 times more return on investment than United Natural. However, Banco Santander SA is 1.9 times less risky than United Natural. It trades about 0.01 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.0 per unit of risk. If you would invest  8,807  in Banco Santander SA on October 25, 2024 and sell it today you would lose (72.00) from holding Banco Santander SA or give up 0.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.13%
Values	Daily Returns

Banco Santander SA  vs.  United Natural Foods

Banco Santander SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Banco Santander SA investors.

United Natural Foods

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 13 (%) 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.

Pair Trading with Banco and United Natural

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

The idea behind Banco Santander SA and United Natural Foods 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 Stocks Directory module to find actively traded stocks across global markets.