Correlation Between Alibaba Group and United Natural
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and United Natural Foods,, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and United Natural.
Diversification Opportunities for Alibaba Group and United Natural
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alibaba and United is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding 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 Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and United Natural go up and down completely randomly.
Pair Corralation between Alibaba Group and United Natural
Assuming the 90 days trading horizon Alibaba Group Holding is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.74 times less risky than United Natural. The stock trades about 0.0 of its potential returns per unit of risk. The United Natural Foods, is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,818 in United Natural Foods, on October 14, 2024 and sell it today you would earn a total of 1,282 from holding United Natural Foods, or generate 45.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 13.88% |
| Values | Daily Returns |
Alibaba Group Holding vs. United Natural Foods,
Performance |
| Timeline |
| Alibaba Group Holding |
| United Natural Foods, |
Alibaba Group and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and United Natural
The main advantage of trading using opposite Alibaba Group and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.| Alibaba Group vs. Global X Funds | Alibaba Group vs. Metalurgica Gerdau SA | Alibaba Group vs. Nordon Indstrias Metalrgicas | Alibaba Group vs. SK Telecom Co, |
| United Natural vs. Taiwan Semiconductor Manufacturing | United Natural vs. Apple Inc | United Natural vs. Alibaba Group Holding | United Natural vs. Banco Santander Chile |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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