Correlation Between United Natural and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both United Natural and REINET INVESTMENTS 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA, you can compare the effects of market volatilities on United Natural and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and REINET INVESTMENTS.
Diversification Opportunities for United Natural and REINET INVESTMENTS
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and REINET is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of United Natural i.e., United Natural and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between United Natural and REINET INVESTMENTS
Assuming the 90 days horizon United Natural Foods is expected to generate 1.88 times more return on investment than REINET INVESTMENTS. However, United Natural is 1.88 times more volatile than REINET INVESTMENTS SCA. It trades about 0.35 of its potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about -0.04 per unit of risk. If you would invest 1,875 in United Natural Foods on August 31, 2024 and sell it today you would earn a total of 423.00 from holding United Natural Foods or generate 22.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| United Natural Foods |
| REINET INVESTMENTS SCA |
United Natural and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and REINET INVESTMENTS
The main advantage of trading using opposite United Natural and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS'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 |
| REINET INVESTMENTS vs. Ameriprise Financial | REINET INVESTMENTS vs. Ares Management Corp | REINET INVESTMENTS vs. Superior Plus Corp | REINET INVESTMENTS vs. NMI Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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