Correlation Between Metro AG and United Natural

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Can any of the company-specific risk be diversified away by investing in both Metro AG 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 Metro AG and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro AG and United Natural Foods, you can compare the effects of market volatilities on Metro AG 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 Metro AG with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro AG and United Natural.

Diversification Opportunities for Metro AG and United Natural

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Metro and United is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG 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 Metro AG 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 Metro AG 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 Metro AG i.e., Metro AG and United Natural go up and down completely randomly.

Pair Corralation between Metro AG and United Natural

Assuming the 90 days trading horizon Metro AG is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Metro AG is 1.13 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 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,703  in United Natural Foods on October 19, 2024 and sell it today you would lose (1,037) from holding United Natural Foods or give up 28.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy94.61%
ValuesDaily Returns

Metro AG  vs.  United Natural Foods

 Performance 
       Timeline  
Metro AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Metro AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
United Natural Foods 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 11 (%) 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.

Metro AG and United Natural Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Metro AG and United Natural

The main advantage of trading using opposite Metro AG and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro AG 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.
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The idea behind Metro AG 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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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 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..

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