Correlation Between United Breweries and National Retail

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

By analyzing existing cross correlation between United Breweries Co and National Retail Properties, you can compare the effects of market volatilities on United Breweries and National Retail 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 Breweries with a short position of National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and National Retail.

Diversification Opportunities for United Breweries and National Retail

-0.27

Correlation Coefficient

United Breweries  National Retail

Very good diversification

The 3 months correlation between United and National is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop and United Breweries 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 Breweries Co are associated (or correlated) with National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of United Breweries i.e., United Breweries and National Retail go up and down completely randomly.

Pair Corralation between United Breweries and National Retail

Assuming the 90 days trading horizon United Breweries is expected to generate 1.3 times less return on investment than National Retail. In addition to that, United Breweries is 1.48 times more volatile than National Retail Properties. It trades about 0.01 of its total potential returns per unit of risk. National Retail Properties is currently generating about 0.01 per unit of volatility. If you would invest  3,840  in National Retail Properties on September 14, 2024 and sell it today you would earn a total of  216.00  from holding National Retail Properties or generate 5.63% return on investment over 90 days.

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

United Breweries Co  vs.  National Retail Properties

United Breweries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Breweries Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, United Breweries unveiled solid returns over the last few months and may actually be approaching a breakup point.

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Breweries and National Retail

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

The idea behind United Breweries Co and National Retail Properties 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.