Correlation Between United Natural and Stora Enso
Can any of the company-specific risk be diversified away by investing in both United Natural and Stora Enso 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 Stora Enso 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 Stora Enso Oyj, you can compare the effects of market volatilities on United Natural and Stora Enso 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 Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Stora Enso.
Diversification Opportunities for United Natural and Stora Enso
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Stora is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of United Natural i.e., United Natural and Stora Enso go up and down completely randomly.
Pair Corralation between United Natural and Stora Enso
Assuming the 90 days horizon United Natural Foods is expected to generate 1.94 times more return on investment than Stora Enso. However, United Natural is 1.94 times more volatile than Stora Enso Oyj. It trades about 0.0 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.02 per unit of risk. If you would invest 3,783 in United Natural Foods on September 5, 2024 and sell it today you would lose (1,394) from holding United Natural Foods or give up 36.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Natural Foods vs. Stora Enso Oyj
Performance |
| Timeline |
| United Natural Foods |
| Stora Enso Oyj |
United Natural and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Stora Enso
The main advantage of trading using opposite United Natural and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| United Natural vs. Compagnie Plastic Omnium | United Natural vs. Datang International Power | United Natural vs. DOCDATA | United Natural vs. Sumitomo Rubber Industries |
| Stora Enso vs. United Natural Foods | Stora Enso vs. EBRO FOODS | Stora Enso vs. ScanSource | Stora Enso vs. PREMIER FOODS |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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