Correlation Between United Natural and Amgen
Can any of the company-specific risk be diversified away by investing in both United Natural and Amgen 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 Amgen 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 Amgen Inc, you can compare the effects of market volatilities on United Natural and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Amgen.
Diversification Opportunities for United Natural and Amgen
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Amgen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of United Natural i.e., United Natural and Amgen go up and down completely randomly.
Pair Corralation between United Natural and Amgen
Assuming the 90 days horizon United Natural Foods is expected to generate 2.34 times more return on investment than Amgen. However, United Natural is 2.34 times more volatile than Amgen Inc. It trades about 0.07 of its potential returns per unit of risk. Amgen Inc is currently generating about 0.05 per unit of risk. If you would invest 1,327 in United Natural Foods on August 26, 2024 and sell it today you would earn a total of 883.00 from holding United Natural Foods or generate 66.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Amgen Inc
Performance |
| Timeline |
| United Natural Foods |
| Amgen Inc |
United Natural and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Amgen
The main advantage of trading using opposite United Natural and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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