Correlation Between United Natural and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both United Natural and BE Semiconductor 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 BE Semiconductor 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 BE Semiconductor Industries, you can compare the effects of market volatilities on United Natural and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and BE Semiconductor.
Diversification Opportunities for United Natural and BE Semiconductor
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and BSI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of United Natural i.e., United Natural and BE Semiconductor go up and down completely randomly.
Pair Corralation between United Natural and BE Semiconductor
Assuming the 90 days horizon United Natural is expected to generate 30.91 times less return on investment than BE Semiconductor. But when comparing it to its historical volatility, United Natural Foods is 1.08 times less risky than BE Semiconductor. It trades about 0.01 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 12,720 in BE Semiconductor Industries on October 17, 2024 and sell it today you would earn a total of 1,155 from holding BE Semiconductor Industries or generate 9.08% 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. BE Semiconductor Industries
Performance |
| Timeline |
| United Natural Foods |
| BE Semiconductor Ind |
United Natural and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and BE Semiconductor
The main advantage of trading using opposite United Natural and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| United Natural vs. ASPEN TECHINC DL | United Natural vs. Mitsui Chemicals | United Natural vs. Amkor Technology | United Natural vs. Fortescue Metals Group |
| BE Semiconductor vs. ScanSource | BE Semiconductor vs. United Natural Foods | BE Semiconductor vs. MEDCAW INVESTMENTS LS 01 | BE Semiconductor vs. CHRYSALIS INVESTMENTS LTD |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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