Correlation Between Stora Enso and United Natural
Can any of the company-specific risk be diversified away by investing in both Stora Enso 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 Stora Enso and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stora Enso Oyj and United Natural Foods, you can compare the effects of market volatilities on Stora Enso 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 Stora Enso with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stora Enso and United Natural.
Diversification Opportunities for Stora Enso and United Natural
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stora and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Stora Enso Oyj 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 Stora Enso 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 Stora Enso Oyj 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 Stora Enso i.e., Stora Enso and United Natural go up and down completely randomly.
Pair Corralation between Stora Enso and United Natural
Assuming the 90 days trading horizon Stora Enso Oyj is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Stora Enso Oyj is 2.02 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 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,637 in United Natural Foods on September 13, 2024 and sell it today you would lose (805.00) from holding United Natural Foods or give up 22.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stora Enso Oyj vs. United Natural Foods
Performance |
| Timeline |
| Stora Enso Oyj |
| United Natural Foods |
Stora Enso and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stora Enso and United Natural
The main advantage of trading using opposite Stora Enso and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stora Enso 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.| Stora Enso vs. AUSTEVOLL SEAFOOD | Stora Enso vs. Fevertree Drinks PLC | Stora Enso vs. National Beverage Corp | Stora Enso vs. Suntory Beverage Food |
| United Natural vs. Metro AG | United Natural vs. Superior Plus Corp | United Natural vs. SIVERS SEMICONDUCTORS AB | United Natural vs. NorAm Drilling AS |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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