Correlation Between United Natural and Bank of America
Can any of the company-specific risk be diversified away by investing in both United Natural and Bank of America 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 Bank of America 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 Bank of America, you can compare the effects of market volatilities on United Natural and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Bank of America.
Diversification Opportunities for United Natural and Bank of America
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Bank is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of United Natural i.e., United Natural and Bank of America go up and down completely randomly.
Pair Corralation between United Natural and Bank of America
Assuming the 90 days horizon United Natural Foods is expected to generate 1.23 times more return on investment than Bank of America. However, United Natural is 1.23 times more volatile than Bank of America. It trades about 0.34 of its potential returns per unit of risk. Bank of America is currently generating about 0.32 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 Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Natural Foods vs. Bank of America
Performance |
| Timeline |
| United Natural Foods |
| Bank of America |
United Natural and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Bank of America
The main advantage of trading using opposite United Natural and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food Group |
| Bank of America vs. PRECISION DRILLING P | Bank of America vs. Insurance Australia Group | Bank of America vs. United Insurance Holdings | Bank of America vs. SBI Insurance Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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