Correlation Between United Natural and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both United Natural and Hufvudstaden 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 Hufvudstaden 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 Hufvudstaden AB, you can compare the effects of market volatilities on United Natural and Hufvudstaden 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 Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Hufvudstaden.
Diversification Opportunities for United Natural and Hufvudstaden
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Hufvudstaden is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden AB 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 Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of United Natural i.e., United Natural and Hufvudstaden go up and down completely randomly.
Pair Corralation between United Natural and Hufvudstaden
Assuming the 90 days horizon United Natural Foods is expected to generate 1.89 times more return on investment than Hufvudstaden. However, United Natural is 1.89 times more volatile than Hufvudstaden AB. It trades about 0.34 of its potential returns per unit of risk. Hufvudstaden AB is currently generating about -0.05 per unit of risk. If you would invest 1,888 in United Natural Foods on September 1, 2024 and sell it today you would earn a total of 402.00 from holding United Natural Foods or generate 21.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Natural Foods vs. Hufvudstaden AB
Performance |
| Timeline |
| United Natural Foods |
| Hufvudstaden AB |
United Natural and Hufvudstaden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Hufvudstaden
The main advantage of trading using opposite United Natural and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Hufvudstaden 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 Hufvudstaden will offset losses from the drop in Hufvudstaden's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Performance Food Group | United Natural vs. US Foods Holding |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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