Correlation Between REINET INVESTMENTS and United Natural
Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS 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 REINET INVESTMENTS and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REINET INVESTMENTS SCA and United Natural Foods, you can compare the effects of market volatilities on REINET INVESTMENTS 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 REINET INVESTMENTS with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and United Natural.
Diversification Opportunities for REINET INVESTMENTS and United Natural
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REINET and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 REINET INVESTMENTS i.e., REINET INVESTMENTS and United Natural go up and down completely randomly.
Pair Corralation between REINET INVESTMENTS and United Natural
Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, REINET INVESTMENTS SCA is 1.88 times less risky than United Natural. The stock trades about -0.04 of its potential returns per unit of risk. The United Natural Foods is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,875 in United Natural Foods on August 31, 2024 and sell it today you would earn a total of 423.00 from holding United Natural Foods or generate 22.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REINET INVESTMENTS SCA vs. United Natural Foods
Performance |
| Timeline |
| REINET INVESTMENTS SCA |
| United Natural Foods |
REINET INVESTMENTS and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REINET INVESTMENTS and United Natural
The main advantage of trading using opposite REINET INVESTMENTS and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS 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.| REINET INVESTMENTS vs. Ameriprise Financial | REINET INVESTMENTS vs. Ares Management Corp | REINET INVESTMENTS vs. Superior Plus Corp | REINET INVESTMENTS vs. NMI Holdings |
| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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