Correlation Between BLUESCOPE STEEL and United Natural
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL 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 BLUESCOPE STEEL and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and United Natural Foods, you can compare the effects of market volatilities on BLUESCOPE STEEL 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 BLUESCOPE STEEL with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and United Natural.
Diversification Opportunities for BLUESCOPE STEEL and United Natural
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BLUESCOPE and United is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL i.e., BLUESCOPE STEEL and United Natural go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and United Natural
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 8.66 times less return on investment than United Natural. In addition to that, BLUESCOPE STEEL is 1.07 times more volatile than United Natural Foods. It trades about 0.04 of its total potential returns per unit of risk. United Natural Foods is currently generating about 0.37 per unit of volatility. If you would invest 1,820 in United Natural Foods on August 28, 2024 and sell it today you would earn a total of 390.00 from holding United Natural Foods or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. United Natural Foods
Performance |
| Timeline |
| BLUESCOPE STEEL |
| United Natural Foods |
BLUESCOPE STEEL and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and United Natural
The main advantage of trading using opposite BLUESCOPE STEEL and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL 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.| BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc |
| United Natural vs. Jernimo Martins SGPS | United Natural vs. Axfood AB | United Natural vs. PF Bakkafrost | United Natural vs. Metro AG |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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