Correlation Between United Natural and Pfizer
Can any of the company-specific risk be diversified away by investing in both United Natural and Pfizer 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 Pfizer 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 Pfizer Inc, you can compare the effects of market volatilities on United Natural and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Pfizer.
Diversification Opportunities for United Natural and Pfizer
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Pfizer is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of United Natural i.e., United Natural and Pfizer go up and down completely randomly.
Pair Corralation between United Natural and Pfizer
Assuming the 90 days horizon United Natural Foods is expected to generate 2.48 times more return on investment than Pfizer. However, United Natural is 2.48 times more volatile than Pfizer Inc. It trades about 0.07 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.01 per unit of risk. If you would invest 1,327 in United Natural Foods on August 26, 2024 and sell it today you would earn a total of 883.00 from holding United Natural Foods or generate 66.54% 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. Pfizer Inc
Performance |
| Timeline |
| United Natural Foods |
| Pfizer Inc |
United Natural and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Pfizer
The main advantage of trading using opposite United Natural and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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