Correlation Between United Natural and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both United Natural and Maple Leaf 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 Maple Leaf 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 Maple Leaf Foods, you can compare the effects of market volatilities on United Natural and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Maple Leaf.
Diversification Opportunities for United Natural and Maple Leaf
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Maple is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of United Natural i.e., United Natural and Maple Leaf go up and down completely randomly.
Pair Corralation between United Natural and Maple Leaf
Assuming the 90 days horizon United Natural is expected to generate 1.77 times less return on investment than Maple Leaf. But when comparing it to its historical volatility, United Natural Foods is 1.0 times less risky than Maple Leaf. It trades about 0.11 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,330 in Maple Leaf Foods on October 25, 2024 and sell it today you would earn a total of 90.00 from holding Maple Leaf Foods or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Maple Leaf Foods
Performance |
| Timeline |
| United Natural Foods |
| Maple Leaf Foods |
United Natural and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Maple Leaf
The main advantage of trading using opposite United Natural and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| United Natural vs. Japan Asia Investment | United Natural vs. REINET INVESTMENTS SCA | United Natural vs. 24SEVENOFFICE GROUP AB | United Natural vs. Tower One Wireless |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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