Correlation Between Sysco and United Natural

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

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

Diversification Opportunities for Sysco and United Natural

-0.2

Correlation Coefficient

Sysco  United Natural

Good diversification

The 3 months correlation between Sysco and United is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sysco 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 Sysco 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 Sysco 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 Sysco i.e., Sysco and United Natural go up and down completely randomly.

Pair Corralation between Sysco and United Natural

Considering the 90-day investment horizon Sysco is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Sysco is 4.38 times less risky than United Natural. The stock trades about -0.01 of its potential returns per unit of risk. The United Natural Foods is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,620  in United Natural Foods on September 3, 2024 and sell it today you would earn a total of  863.00  from holding United Natural Foods or generate 53.27% return on investment over 90 days.

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

Sysco  vs.  United Natural Foods

Sysco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

United Natural Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 12 (%) 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 Sysco and United Natural

The main advantage of trading using opposite Sysco and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sysco 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 Sysco 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..