Correlation Between United Natural and ELECOM
Can any of the company-specific risk be diversified away by investing in both United Natural and ELECOM 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 ELECOM 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 ELECOM LTD, you can compare the effects of market volatilities on United Natural and ELECOM 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 ELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and ELECOM.
Diversification Opportunities for United Natural and ELECOM
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and ELECOM is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and ELECOM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECOM LTD 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 ELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECOM LTD has no effect on the direction of United Natural i.e., United Natural and ELECOM go up and down completely randomly.
Pair Corralation between United Natural and ELECOM
Assuming the 90 days horizon United Natural Foods is expected to generate 2.41 times more return on investment than ELECOM. However, United Natural is 2.41 times more volatile than ELECOM LTD. It trades about 0.01 of its potential returns per unit of risk. ELECOM LTD is currently generating about 0.02 per unit of risk. If you would invest 3,814 in United Natural Foods on November 19, 2024 and sell it today you would lose (598.00) from holding United Natural Foods or give up 15.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. ELECOM LTD
Performance |
| Timeline |
| United Natural Foods |
| ELECOM LTD |
United Natural and ELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and ELECOM
The main advantage of trading using opposite United Natural and ELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, ELECOM 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 ELECOM will offset losses from the drop in ELECOM's long position.| United Natural vs. Casio Computer CoLtd | United Natural vs. AviChina Industry Technology | United Natural vs. PREMIER FOODS | United Natural vs. TreeHouse Foods |
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 CEOs Directory module to screen CEOs from public companies around the world.
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