Correlation Between United Natural and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both United Natural and Thyssenkrupp 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 Thyssenkrupp 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 thyssenkrupp AG, you can compare the effects of market volatilities on United Natural and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Thyssenkrupp.
Diversification Opportunities for United Natural and Thyssenkrupp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Thyssenkrupp is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of United Natural i.e., United Natural and Thyssenkrupp go up and down completely randomly.
Pair Corralation between United Natural and Thyssenkrupp
Assuming the 90 days horizon United Natural Foods is expected to generate 1.57 times more return on investment than Thyssenkrupp. However, United Natural is 1.57 times more volatile than thyssenkrupp AG. It trades about 0.06 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about -0.07 per unit of risk. If you would invest 1,483 in United Natural Foods on August 25, 2024 and sell it today you would earn a total of 640.00 from holding United Natural Foods or generate 43.16% 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. thyssenkrupp AG
Performance |
| Timeline |
| United Natural Foods |
| thyssenkrupp AG |
United Natural and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Thyssenkrupp
The main advantage of trading using opposite United Natural and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food Group |
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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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