Correlation Between United Natural and AUSNUTRIA DAIRY

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

Diversification Opportunities for United Natural and AUSNUTRIA DAIRY

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between United and AUSNUTRIA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and AUSNUTRIA DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSNUTRIA DAIRY 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 AUSNUTRIA DAIRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSNUTRIA DAIRY has no effect on the direction of United Natural i.e., United Natural and AUSNUTRIA DAIRY go up and down completely randomly.

Pair Corralation between United Natural and AUSNUTRIA DAIRY

Assuming the 90 days horizon United Natural Foods is expected to generate 2.55 times more return on investment than AUSNUTRIA DAIRY. However, United Natural is 2.55 times more volatile than AUSNUTRIA DAIRY. It trades about 0.21 of its potential returns per unit of risk. AUSNUTRIA DAIRY is currently generating about 0.08 per unit of risk. If you would invest  1,271  in United Natural Foods on September 11, 2024 and sell it today you would earn a total of  979.00  from holding United Natural Foods or generate 77.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

United Natural Foods  vs.  AUSNUTRIA DAIRY

 Performance 
       Timeline  
United Natural Foods 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 16 (%) 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.
AUSNUTRIA DAIRY 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AUSNUTRIA DAIRY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, AUSNUTRIA DAIRY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

United Natural and AUSNUTRIA DAIRY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Natural and AUSNUTRIA DAIRY

The main advantage of trading using opposite United Natural and AUSNUTRIA DAIRY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, AUSNUTRIA DAIRY 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 AUSNUTRIA DAIRY will offset losses from the drop in AUSNUTRIA DAIRY's long position.
The idea behind United Natural Foods and AUSNUTRIA DAIRY 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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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