Correlation Between United Natural and Sempra
Can any of the company-specific risk be diversified away by investing in both United Natural and Sempra 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 Sempra 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 Sempra, you can compare the effects of market volatilities on United Natural and Sempra 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 Sempra. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Sempra.
Diversification Opportunities for United Natural and Sempra
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Sempra is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra 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 Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra has no effect on the direction of United Natural i.e., United Natural and Sempra go up and down completely randomly.
Pair Corralation between United Natural and Sempra
Assuming the 90 days horizon United Natural Foods is expected to under-perform the Sempra. In addition to that, United Natural is 2.85 times more volatile than Sempra. It trades about -0.02 of its total potential returns per unit of risk. Sempra is currently generating about 0.04 per unit of volatility. If you would invest 7,246 in Sempra on August 24, 2024 and sell it today you would earn a total of 1,564 from holding Sempra or generate 21.58% 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. Sempra
Performance |
| Timeline |
| United Natural Foods |
| Sempra |
United Natural and Sempra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Sempra
The main advantage of trading using opposite United Natural and Sempra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Sempra 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 Sempra will offset losses from the drop in Sempra's long position.| United Natural vs. AEON STORES | United Natural vs. National Retail Properties | United Natural vs. CosmoSteel Holdings Limited | United Natural vs. Insteel Industries |
| Sempra vs. Citic Telecom International | Sempra vs. SALESFORCE INC CDR | Sempra vs. Nordic Semiconductor ASA | Sempra vs. CarsalesCom |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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