Correlation Between Compagnie Plastic and United Natural
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic 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 Compagnie Plastic and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and United Natural Foods, you can compare the effects of market volatilities on Compagnie Plastic 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 Compagnie Plastic with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and United Natural.
Diversification Opportunities for Compagnie Plastic and United Natural
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compagnie and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium 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 Compagnie Plastic 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 Compagnie Plastic Omnium 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 Compagnie Plastic i.e., Compagnie Plastic and United Natural go up and down completely randomly.
Pair Corralation between Compagnie Plastic and United Natural
Assuming the 90 days horizon Compagnie Plastic is expected to generate 6.34 times less return on investment than United Natural. But when comparing it to its historical volatility, Compagnie Plastic Omnium is 2.08 times less risky than United Natural. It trades about 0.1 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,938 in United Natural Foods on September 13, 2024 and sell it today you would earn a total of 894.00 from holding United Natural Foods or generate 46.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. United Natural Foods
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| United Natural Foods |
Compagnie Plastic and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and United Natural
The main advantage of trading using opposite Compagnie Plastic and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic 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.| Compagnie Plastic vs. Bridgestone | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. SIVERS SEMICONDUCTORS AB | Compagnie Plastic vs. Norsk Hydro ASA |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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