Correlation Between United Natural and Seagate Technology
Can any of the company-specific risk be diversified away by investing in both United Natural and Seagate Technology 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 United Natural and Seagate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods, and Seagate Technology Holdings, you can compare the effects of market volatilities on United Natural and Seagate Technology 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 United Natural with a short position of Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Seagate Technology.
Diversification Opportunities for United Natural and Seagate Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Seagate is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods, and Seagate Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology and United Natural 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 United Natural Foods, are associated (or correlated) with Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology has no effect on the direction of United Natural i.e., United Natural and Seagate Technology go up and down completely randomly.
Pair Corralation between United Natural and Seagate Technology
Assuming the 90 days trading horizon United Natural is expected to generate 11.96 times less return on investment than Seagate Technology. But when comparing it to its historical volatility, United Natural Foods, is 1.42 times less risky than Seagate Technology. It trades about 0.04 of its potential returns per unit of risk. Seagate Technology Holdings is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 54,609 in Seagate Technology Holdings on October 30, 2024 and sell it today you would earn a total of 9,835 from holding Seagate Technology Holdings or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods, vs. Seagate Technology Holdings
Performance |
| Timeline |
| United Natural Foods, |
| Seagate Technology |
United Natural and Seagate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Seagate Technology
The main advantage of trading using opposite United Natural and Seagate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Seagate Technology 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 Seagate Technology will offset losses from the drop in Seagate Technology's long position.| United Natural vs. Taiwan Semiconductor Manufacturing | United Natural vs. Apple Inc | United Natural vs. Alibaba Group Holding | United Natural vs. Microsoft |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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