Correlation Between United Natural and LION ONE
Can any of the company-specific risk be diversified away by investing in both United Natural and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on United Natural and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and LION ONE.
Diversification Opportunities for United Natural and LION ONE
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and LION is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of United Natural i.e., United Natural and LION ONE go up and down completely randomly.
Pair Corralation between United Natural and LION ONE
Assuming the 90 days horizon United Natural Foods is expected to generate 0.95 times more return on investment than LION ONE. However, United Natural Foods is 1.05 times less risky than LION ONE. It trades about 0.15 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.06 per unit of risk. If you would invest 1,086 in United Natural Foods on August 31, 2024 and sell it today you would earn a total of 1,204 from holding United Natural Foods or generate 110.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. LION ONE METALS
Performance |
| Timeline |
| United Natural Foods |
| LION ONE METALS |
United Natural and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and LION ONE
The main advantage of trading using opposite United Natural and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
| LION ONE vs. SIVERS SEMICONDUCTORS AB | LION ONE vs. Darden Restaurants | LION ONE vs. Reliance Steel Aluminum | LION ONE vs. Q2M Managementberatung AG |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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