Correlation Between United Natural and ATT

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

Diversification Opportunities for United Natural and ATT

0.89

Correlation Coefficient

United Natural  ATT

Very poor diversification

The 3 months correlation between United and ATT is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of United Natural i.e., United Natural and ATT go up and down completely randomly.

Pair Corralation between United Natural and ATT

Assuming the 90 days horizon United Natural Foods is expected to generate 4.05 times more return on investment than ATT. However, United Natural is 4.05 times more volatile than ATT Inc. It trades about 0.17 of its potential returns per unit of risk. ATT Inc is currently generating about 0.22 per unit of risk. If you would invest  1,438  in United Natural Foods on September 4, 2024 and sell it today you would earn a total of  852.00  from holding United Natural Foods or generate 59.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

United Natural Foods  vs.  ATT Inc

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

ATT Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ATT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Natural and ATT

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

The idea behind United Natural Foods and ATT Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.