Correlation Between United Natural and CDW
Can any of the company-specific risk be diversified away by investing in both United Natural and CDW 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 CDW 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 CDW Corporation, you can compare the effects of market volatilities on United Natural and CDW 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 CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and CDW.
Diversification Opportunities for United Natural and CDW
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and CDW is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation 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 CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of United Natural i.e., United Natural and CDW go up and down completely randomly.
Pair Corralation between United Natural and CDW
Assuming the 90 days horizon United Natural Foods is expected to generate 1.2 times more return on investment than CDW. However, United Natural is 1.2 times more volatile than CDW Corporation. It trades about 0.35 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.11 per unit of risk. If you would invest 1,875 in United Natural Foods on August 31, 2024 and sell it today you would earn a total of 423.00 from holding United Natural Foods or generate 22.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. CDW Corp.
Performance |
| Timeline |
| United Natural Foods |
| CDW Corporation |
United Natural and CDW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and CDW
The main advantage of trading using opposite United Natural and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, CDW 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 CDW will offset losses from the drop in CDW'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 |
| CDW vs. AVITA Medical | CDW vs. SCANDMEDICAL SOLDK 040 | CDW vs. Cogent Communications Holdings | CDW vs. Merit Medical Systems |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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