Correlation Between JAPAN AIRLINES and United Natural
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES 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 AIRLINES and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and United Natural Foods, you can compare the effects of market volatilities on JAPAN AIRLINES 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 AIRLINES with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and United Natural.
Diversification Opportunities for JAPAN AIRLINES and United Natural
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JAPAN and United is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES 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 AIRLINES 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 JAPAN AIRLINES 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 AIRLINES i.e., JAPAN AIRLINES and United Natural go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and United Natural
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 2.36 times less return on investment than United Natural. But when comparing it to its historical volatility, JAPAN AIRLINES is 2.31 times less risky than United Natural. It trades about 0.14 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,628 in United Natural Foods on November 4, 2024 and sell it today you would earn a total of 197.00 from holding United Natural Foods or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. United Natural Foods
Performance |
| Timeline |
| JAPAN AIRLINES |
| United Natural Foods |
JAPAN AIRLINES and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and United Natural
The main advantage of trading using opposite JAPAN AIRLINES and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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 AIRLINES vs. TRADEDOUBLER AB SK | JAPAN AIRLINES vs. BJs Wholesale Club | JAPAN AIRLINES vs. Costco Wholesale Corp | JAPAN AIRLINES vs. Fast Retailing Co |
| United Natural vs. CSSC Offshore Marine | United Natural vs. CANON MARKETING JP | United Natural vs. Tradegate AG Wertpapierhandelsbank | United Natural vs. BW OFFSHORE LTD |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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