Correlation Between United Natural and Big Yellow
Can any of the company-specific risk be diversified away by investing in both United Natural and Big Yellow 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 Big Yellow 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 Big Yellow Group, you can compare the effects of market volatilities on United Natural and Big Yellow 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 Big Yellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Big Yellow.
Diversification Opportunities for United Natural and Big Yellow
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Big is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow 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 Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of United Natural i.e., United Natural and Big Yellow go up and down completely randomly.
Pair Corralation between United Natural and Big Yellow
Assuming the 90 days horizon United Natural Foods is expected to generate 3.19 times more return on investment than Big Yellow. However, United Natural is 3.19 times more volatile than Big Yellow Group. It trades about 0.15 of its potential returns per unit of risk. Big Yellow Group is currently generating about -0.14 per unit of risk. If you would invest 1,086 in United Natural Foods on August 31, 2024 and sell it today you would earn a total of 1,204 from holding United Natural Foods or generate 110.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
United Natural Foods vs. Big Yellow Group
Performance |
| Timeline |
| United Natural Foods |
| Big Yellow Group |
United Natural and Big Yellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Big Yellow
The main advantage of trading using opposite United Natural and Big Yellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Big Yellow 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 Big Yellow will offset losses from the drop in Big Yellow's long position.| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
| Big Yellow vs. Sims Metal Management | Big Yellow vs. Playa Hotels Resorts | Big Yellow vs. Coor Service Management | Big Yellow vs. Perdoceo Education |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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