Correlation Between United Natural and Major Drilling
Can any of the company-specific risk be diversified away by investing in both United Natural and Major Drilling 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 Major Drilling 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 Major Drilling Group, you can compare the effects of market volatilities on United Natural and Major Drilling 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 Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Major Drilling.
Diversification Opportunities for United Natural and Major Drilling
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Major is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of United Natural i.e., United Natural and Major Drilling go up and down completely randomly.
Pair Corralation between United Natural and Major Drilling
Assuming the 90 days horizon United Natural Foods is expected to generate 1.78 times more return on investment than Major Drilling. However, United Natural is 1.78 times more volatile than Major Drilling Group. It trades about 0.0 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest 3,957 in United Natural Foods on November 7, 2024 and sell it today you would lose (1,080) from holding United Natural Foods or give up 27.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Major Drilling Group
Performance |
| Timeline |
| United Natural Foods |
| Major Drilling Group |
United Natural and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Major Drilling
The main advantage of trading using opposite United Natural and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| United Natural vs. Tencent Music Entertainment | United Natural vs. PENN Entertainment | United Natural vs. ZINC MEDIA GR | United Natural vs. Universal Entertainment |
| Major Drilling vs. CREO MEDICAL GRP | Major Drilling vs. CVR Medical Corp | Major Drilling vs. ALBIS LEASING AG | Major Drilling vs. Genertec Universal Medical |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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