Correlation Between United Natural and AMADEUS IT
Can any of the company-specific risk be diversified away by investing in both United Natural and AMADEUS IT 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 AMADEUS IT 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 AMADEUS IT GRP, you can compare the effects of market volatilities on United Natural and AMADEUS IT 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 AMADEUS IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and AMADEUS IT.
Diversification Opportunities for United Natural and AMADEUS IT
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and AMADEUS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and AMADEUS IT GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT GRP 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 AMADEUS IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMADEUS IT GRP has no effect on the direction of United Natural i.e., United Natural and AMADEUS IT go up and down completely randomly.
Pair Corralation between United Natural and AMADEUS IT
Assuming the 90 days horizon United Natural Foods is expected to generate 2.53 times more return on investment than AMADEUS IT. However, United Natural is 2.53 times more volatile than AMADEUS IT GRP. It trades about 0.14 of its potential returns per unit of risk. AMADEUS IT GRP is currently generating about -0.09 per unit of risk. If you would invest 1,876 in United Natural Foods on August 25, 2024 and sell it today you would earn a total of 147.00 from holding United Natural Foods or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. AMADEUS IT GRP
Performance |
| Timeline |
| United Natural Foods |
| AMADEUS IT GRP |
United Natural and AMADEUS IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and AMADEUS IT
The main advantage of trading using opposite United Natural and AMADEUS IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, AMADEUS IT 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 AMADEUS IT will offset losses from the drop in AMADEUS IT's long position.| United Natural vs. AEON STORES | United Natural vs. National Retail Properties | United Natural vs. CosmoSteel Holdings Limited | United Natural vs. Insteel Industries |
| AMADEUS IT vs. Accenture plc | AMADEUS IT vs. Cognizant Technology Solutions | AMADEUS IT vs. Superior Plus Corp | AMADEUS IT vs. NMI Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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