Correlation Between Japan Steel and United Natural
Can any of the company-specific risk be diversified away by investing in both Japan 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 Japan 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 The Japan Steel and United Natural Foods, you can compare the effects of market volatilities on Japan 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 Japan Steel with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Steel and United Natural.
Diversification Opportunities for Japan Steel and United Natural
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and United is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Japan 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 Japan 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 The Japan 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 Japan Steel i.e., Japan Steel and United Natural go up and down completely randomly.
Pair Corralation between Japan Steel and United Natural
Assuming the 90 days horizon The Japan Steel is expected to generate 0.71 times more return on investment than United Natural. However, The Japan Steel is 1.42 times less risky than United Natural. It trades about 0.07 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.04 per unit of risk. If you would invest 1,890 in The Japan Steel on October 12, 2024 and sell it today you would earn a total of 1,610 from holding The Japan Steel or generate 85.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
The Japan Steel vs. United Natural Foods
Performance |
| Timeline |
| Japan Steel |
| United Natural Foods |
Japan Steel and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Steel and United Natural
The main advantage of trading using opposite Japan Steel and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan 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.| Japan Steel vs. COPLAND ROAD CAPITAL | Japan Steel vs. Yuexiu Transport Infrastructure | Japan Steel vs. Gold Road Resources | Japan Steel vs. New Residential Investment |
| United Natural vs. US Foods Holding | United Natural vs. Axfood AB | United Natural vs. Superior Plus Corp | United Natural vs. NMI Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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