Correlation Between United Natural and Toho
Can any of the company-specific risk be diversified away by investing in both United Natural and Toho 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 Toho 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 Toho Co, you can compare the effects of market volatilities on United Natural and Toho 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 Toho. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Toho.
Diversification Opportunities for United Natural and Toho
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Toho is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Toho Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toho 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 Toho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toho has no effect on the direction of United Natural i.e., United Natural and Toho go up and down completely randomly.
Pair Corralation between United Natural and Toho
Assuming the 90 days horizon United Natural Foods is expected to generate 2.35 times more return on investment than Toho. However, United Natural is 2.35 times more volatile than Toho Co. It trades about 0.17 of its potential returns per unit of risk. Toho Co is currently generating about 0.16 per unit of risk. If you would invest 2,025 in United Natural Foods on October 20, 2024 and sell it today you would earn a total of 641.00 from holding United Natural Foods or generate 31.65% 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. Toho Co
Performance |
| Timeline |
| United Natural Foods |
| Toho |
United Natural and Toho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Toho
The main advantage of trading using opposite United Natural and Toho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Toho 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 Toho will offset losses from the drop in Toho's long position.| United Natural vs. Chuangs China Investments | United Natural vs. SLR Investment Corp | United Natural vs. MOLSON RS BEVERAGE | United Natural vs. Lery Seafood Group |
| Toho vs. Live Nation Entertainment | Toho vs. Dolby Laboratories | Toho vs. CTS Eventim AG | Toho vs. Lions Gate Entertainment |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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