Correlation Between United Natural and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both United Natural and Thai Beverage 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 Thai Beverage 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 Thai Beverage Public, you can compare the effects of market volatilities on United Natural and Thai Beverage 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 Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Thai Beverage.
Diversification Opportunities for United Natural and Thai Beverage
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Thai is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public 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 Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of United Natural i.e., United Natural and Thai Beverage go up and down completely randomly.
Pair Corralation between United Natural and Thai Beverage
Assuming the 90 days horizon United Natural Foods is expected to generate 2.53 times more return on investment than Thai Beverage. However, United Natural is 2.53 times more volatile than Thai Beverage Public. It trades about 0.31 of its potential returns per unit of risk. Thai Beverage Public is currently generating about 0.17 per unit of risk. If you would invest 1,961 in United Natural Foods on September 12, 2024 and sell it today you would earn a total of 871.00 from holding United Natural Foods or generate 44.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Thai Beverage Public
Performance |
| Timeline |
| United Natural Foods |
| Thai Beverage Public |
United Natural and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Thai Beverage
The main advantage of trading using opposite United Natural and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Thai Beverage 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 Thai Beverage will offset losses from the drop in Thai Beverage's long position.| United Natural vs. Richardson Electronics | United Natural vs. Nucletron Electronic Aktiengesellschaft | United Natural vs. Benchmark Electronics | United Natural vs. Solstad Offshore ASA |
| Thai Beverage vs. Diageo plc | Thai Beverage vs. Rmy Cointreau SA | Thai Beverage vs. Treasury Wine Estates |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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