Correlation Between United Natural and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both United Natural and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY, you can compare the effects of market volatilities on United Natural and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and AECOM TECHNOLOGY.
Diversification Opportunities for United Natural and AECOM TECHNOLOGY
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and AECOM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of United Natural i.e., United Natural and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between United Natural and AECOM TECHNOLOGY
Assuming the 90 days horizon United Natural Foods is expected to generate 3.38 times more return on investment than AECOM TECHNOLOGY. However, United Natural is 3.38 times more volatile than AECOM TECHNOLOGY. It trades about 0.17 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.07 per unit of risk. If you would invest 1,482 in United Natural Foods on October 31, 2024 and sell it today you would earn a total of 1,256 from holding United Natural Foods or generate 84.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| United Natural Foods |
| AECOM TECHNOLOGY |
United Natural and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and AECOM TECHNOLOGY
The main advantage of trading using opposite United Natural and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.| United Natural vs. Datadog | United Natural vs. MAVEN WIRELESS SWEDEN | United Natural vs. 24SEVENOFFICE GROUP AB | United Natural vs. DATAGROUP SE |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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