Correlation Between Performance Food and United Natural
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and United Natural Foods, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and United Natural.
Diversification Opportunities for Performance Food and United Natural
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Performance and United is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group 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 Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and United Natural go up and down completely randomly.
Pair Corralation between Performance Food and United Natural
Assuming the 90 days horizon Performance Food is expected to generate 1.77 times less return on investment than United Natural. But when comparing it to its historical volatility, Performance Food Group is 1.05 times less risky than United Natural. It trades about 0.21 of its potential returns per unit of risk. 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 Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. United Natural Foods
Performance |
| Timeline |
| Performance Food |
| United Natural Foods |
Performance Food and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and United Natural
The main advantage of trading using opposite Performance Food and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. EPSILON HEALTHCARE LTD | Performance Food vs. ScanSource | Performance Food vs. SHIP HEALTHCARE HLDGINC | Performance Food vs. National Health Investors |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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