Correlation Between United Natural and Lekoil
Can any of the company-specific risk be diversified away by investing in both United Natural and Lekoil 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 Lekoil 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 Lekoil Limited, you can compare the effects of market volatilities on United Natural and Lekoil 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 Lekoil. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Lekoil.
Diversification Opportunities for United Natural and Lekoil
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Lekoil is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Lekoil Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lekoil Limited 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 Lekoil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lekoil Limited has no effect on the direction of United Natural i.e., United Natural and Lekoil go up and down completely randomly.
Pair Corralation between United Natural and Lekoil
Assuming the 90 days horizon United Natural Foods is expected to generate 0.66 times more return on investment than Lekoil. However, United Natural Foods is 1.51 times less risky than Lekoil. It trades about 0.21 of its potential returns per unit of risk. Lekoil Limited is currently generating about -0.05 per unit of risk. If you would invest 1,468 in United Natural Foods on August 30, 2024 and sell it today you would earn a total of 830.00 from holding United Natural Foods or generate 56.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
United Natural Foods vs. Lekoil Limited
Performance |
| Timeline |
| United Natural Foods |
| Lekoil Limited |
United Natural and Lekoil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Lekoil
The main advantage of trading using opposite United Natural and Lekoil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Lekoil 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 Lekoil will offset losses from the drop in Lekoil's long position.| United Natural vs. Constellation Software | United Natural vs. GEAR4MUSIC LS 10 | United Natural vs. UPDATE SOFTWARE | United Natural vs. Take Two Interactive Software |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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