Correlation Between Bunzl Plc and United Natural
Can any of the company-specific risk be diversified away by investing in both Bunzl Plc 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 Bunzl Plc and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl plc and United Natural Foods, you can compare the effects of market volatilities on Bunzl Plc 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 Bunzl Plc with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl Plc and United Natural.
Diversification Opportunities for Bunzl Plc and United Natural
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bunzl and United is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl plc 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 Bunzl Plc 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 Bunzl plc 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 Bunzl Plc i.e., Bunzl Plc and United Natural go up and down completely randomly.
Pair Corralation between Bunzl Plc and United Natural
Assuming the 90 days trading horizon Bunzl plc is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Bunzl plc is 2.27 times less risky than United Natural. The stock trades about -0.02 of its potential returns per unit of risk. The United Natural Foods is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,820 in United Natural Foods on August 29, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunzl plc vs. United Natural Foods
Performance |
| Timeline |
| Bunzl plc |
| United Natural Foods |
Bunzl Plc and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl Plc and United Natural
The main advantage of trading using opposite Bunzl Plc and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl Plc 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.| Bunzl Plc vs. Commonwealth Bank of | Bunzl Plc vs. Singapore Reinsurance | Bunzl Plc vs. REVO INSURANCE SPA | Bunzl Plc vs. COMINTL BANK ADR1 |
| United Natural vs. DAIRY FARM INTL | United Natural vs. LION ONE METALS | United Natural vs. Sumitomo Mitsui Construction | United Natural vs. WIMFARM SA EO |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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