Correlation Between United Natural and Beazley PLC
Can any of the company-specific risk be diversified away by investing in both United Natural and Beazley PLC 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 Beazley PLC 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 Beazley PLC, you can compare the effects of market volatilities on United Natural and Beazley PLC 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 Beazley PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Beazley PLC.
Diversification Opportunities for United Natural and Beazley PLC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Beazley is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Beazley PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazley PLC 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 Beazley PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazley PLC has no effect on the direction of United Natural i.e., United Natural and Beazley PLC go up and down completely randomly.
Pair Corralation between United Natural and Beazley PLC
Assuming the 90 days horizon United Natural Foods is expected to generate 1.59 times more return on investment than Beazley PLC. However, United Natural is 1.59 times more volatile than Beazley PLC. It trades about 0.2 of its potential returns per unit of risk. Beazley PLC is currently generating about 0.01 per unit of risk. If you would invest 2,751 in United Natural Foods on November 27, 2024 and sell it today you would earn a total of 314.00 from holding United Natural Foods or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Natural Foods vs. Beazley PLC
Performance |
| Timeline |
| United Natural Foods |
| Beazley PLC |
United Natural and Beazley PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Beazley PLC
The main advantage of trading using opposite United Natural and Beazley PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Beazley PLC 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 Beazley PLC will offset losses from the drop in Beazley PLC's long position.| United Natural vs. JIAHUA STORES | United Natural vs. BURLINGTON STORES | United Natural vs. Focus Home Interactive | United Natural vs. NAKED WINES PLC |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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