Correlation Between DOCDATA and United Natural

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

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

Diversification Opportunities for DOCDATA and United Natural

-0.8

Correlation Coefficient

DOCDATA  United Natural

Pay attention - limited upside

The 3 months correlation between DOCDATA and United is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding DOCDATA 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 DOCDATA 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 DOCDATA 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 DOCDATA i.e., DOCDATA and United Natural go up and down completely randomly.

Pair Corralation between DOCDATA and United Natural

Assuming the 90 days trading horizon DOCDATA is expected to under-perform the United Natural. In addition to that, DOCDATA is 1.28 times more volatile than United Natural Foods. It trades about -0.03 of its total potential returns per unit of risk. United Natural Foods is currently generating about 0.0 per unit of volatility. If you would invest  3,783  in United Natural Foods on September 5, 2024 and sell it today you would lose (1,394) from holding United Natural Foods or give up 36.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

DOCDATA  vs.  United Natural Foods

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 nearly fragile basic indicators, United Natural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DOCDATA and United Natural

The main advantage of trading using opposite DOCDATA and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOCDATA 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 DOCDATA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.