Correlation Between United Natural and EssilorLuxottica
Can any of the company-specific risk be diversified away by investing in both United Natural and EssilorLuxottica 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 EssilorLuxottica 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 EssilorLuxottica Socit anonyme, you can compare the effects of market volatilities on United Natural and EssilorLuxottica 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 EssilorLuxottica. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and EssilorLuxottica.
Diversification Opportunities for United Natural and EssilorLuxottica
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and EssilorLuxottica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and EssilorLuxottica Socit anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EssilorLuxottica Socit 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 EssilorLuxottica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EssilorLuxottica Socit has no effect on the direction of United Natural i.e., United Natural and EssilorLuxottica go up and down completely randomly.
Pair Corralation between United Natural and EssilorLuxottica
Assuming the 90 days horizon United Natural is expected to generate 1.84 times less return on investment than EssilorLuxottica. In addition to that, United Natural is 3.29 times more volatile than EssilorLuxottica Socit anonyme. It trades about 0.01 of its total potential returns per unit of risk. EssilorLuxottica Socit anonyme is currently generating about 0.07 per unit of volatility. If you would invest 17,635 in EssilorLuxottica Socit anonyme on August 26, 2024 and sell it today you would earn a total of 5,975 from holding EssilorLuxottica Socit anonyme or generate 33.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. EssilorLuxottica Socit anonyme
Performance |
| Timeline |
| United Natural Foods |
| EssilorLuxottica Socit |
United Natural and EssilorLuxottica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and EssilorLuxottica
The main advantage of trading using opposite United Natural and EssilorLuxottica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, EssilorLuxottica 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 EssilorLuxottica will offset losses from the drop in EssilorLuxottica's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food Group |
| EssilorLuxottica vs. PTT Global Chemical | EssilorLuxottica vs. Ryanair Holdings plc | EssilorLuxottica vs. Alaska Air Group | EssilorLuxottica vs. SHIN ETSU CHEMICAL |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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