Correlation Between United Natural and Flight Centre
Can any of the company-specific risk be diversified away by investing in both United Natural and Flight Centre 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 Flight Centre 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 Flight Centre Travel, you can compare the effects of market volatilities on United Natural and Flight Centre 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 Flight Centre. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Flight Centre.
Diversification Opportunities for United Natural and Flight Centre
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Flight is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Flight Centre Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flight Centre Travel 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 Flight Centre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flight Centre Travel has no effect on the direction of United Natural i.e., United Natural and Flight Centre go up and down completely randomly.
Pair Corralation between United Natural and Flight Centre
Assuming the 90 days horizon United Natural Foods is expected to under-perform the Flight Centre. In addition to that, United Natural is 1.85 times more volatile than Flight Centre Travel. It trades about 0.0 of its total potential returns per unit of risk. Flight Centre Travel is currently generating about 0.03 per unit of volatility. If you would invest 887.00 in Flight Centre Travel on August 30, 2024 and sell it today you would earn a total of 163.00 from holding Flight Centre Travel or generate 18.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Flight Centre Travel
Performance |
| Timeline |
| United Natural Foods |
| Flight Centre Travel |
United Natural and Flight Centre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Flight Centre
The main advantage of trading using opposite United Natural and Flight Centre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Flight Centre 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 Flight Centre will offset losses from the drop in Flight Centre's long position.| United Natural vs. Superior Plus Corp | United Natural vs. SIVERS SEMICONDUCTORS AB | United Natural vs. Talanx AG | United Natural vs. 2G ENERGY |
| Flight Centre vs. Aedas Homes SA | Flight Centre vs. Haverty Furniture Companies | Flight Centre vs. WILLIS LEASE FIN | Flight Centre vs. UNITED RENTALS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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