Correlation Between SEKISUI CHEMICAL and United Natural
Can any of the company-specific risk be diversified away by investing in both SEKISUI CHEMICAL 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 SEKISUI CHEMICAL and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEKISUI CHEMICAL and United Natural Foods, you can compare the effects of market volatilities on SEKISUI CHEMICAL 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 SEKISUI CHEMICAL with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEKISUI CHEMICAL and United Natural.
Diversification Opportunities for SEKISUI CHEMICAL and United Natural
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SEKISUI and United is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SEKISUI CHEMICAL 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 SEKISUI CHEMICAL 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 SEKISUI CHEMICAL 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 SEKISUI CHEMICAL i.e., SEKISUI CHEMICAL and United Natural go up and down completely randomly.
Pair Corralation between SEKISUI CHEMICAL and United Natural
Assuming the 90 days trading horizon SEKISUI CHEMICAL is expected to generate 1.81 times less return on investment than United Natural. But when comparing it to its historical volatility, SEKISUI CHEMICAL is 2.86 times less risky than United Natural. It trades about 0.04 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,168 in United Natural Foods on August 31, 2024 and sell it today you would earn a total of 122.00 from holding United Natural Foods or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEKISUI CHEMICAL vs. United Natural Foods
Performance |
| Timeline |
| SEKISUI CHEMICAL |
| United Natural Foods |
SEKISUI CHEMICAL and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEKISUI CHEMICAL and United Natural
The main advantage of trading using opposite SEKISUI CHEMICAL and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEKISUI CHEMICAL 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.| SEKISUI CHEMICAL vs. SIVERS SEMICONDUCTORS AB | SEKISUI CHEMICAL vs. Darden Restaurants | SEKISUI CHEMICAL vs. Reliance Steel Aluminum | SEKISUI CHEMICAL vs. Q2M Managementberatung AG |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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