Correlation Between United Natural and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both United Natural and Dominion Energy 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 Dominion Energy 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 Dominion Energy, you can compare the effects of market volatilities on United Natural and Dominion Energy 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 Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Dominion Energy.
Diversification Opportunities for United Natural and Dominion Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Dominion is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy 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 Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of United Natural i.e., United Natural and Dominion Energy go up and down completely randomly.
Pair Corralation between United Natural and Dominion Energy
Assuming the 90 days horizon United Natural Foods is expected to generate 1.42 times more return on investment than Dominion Energy. However, United Natural is 1.42 times more volatile than Dominion Energy. It trades about 0.37 of its potential returns per unit of risk. Dominion Energy is currently generating about 0.03 per unit of risk. If you would invest 1,820 in United Natural Foods on August 28, 2024 and sell it today you would earn a total of 390.00 from holding United Natural Foods or generate 21.43% 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. Dominion Energy
Performance |
| Timeline |
| United Natural Foods |
| Dominion Energy |
United Natural and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Dominion Energy
The main advantage of trading using opposite United Natural and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy's long position.| United Natural vs. Lion One Metals | United Natural vs. LION ONE METALS | United Natural vs. GREENX METALS LTD | United Natural vs. Harmony Gold Mining |
| Dominion Energy vs. Boyd Gaming | Dominion Energy vs. TROPHY GAMES DEV | Dominion Energy vs. NTG Nordic Transport | Dominion Energy vs. QUEEN S ROAD |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |