Correlation Between United Natural and UFP Industries
Can any of the company-specific risk be diversified away by investing in both United Natural and UFP Industries 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 UFP Industries 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 UFP Industries, you can compare the effects of market volatilities on United Natural and UFP Industries 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 UFP Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and UFP Industries.
Diversification Opportunities for United Natural and UFP Industries
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and UFP is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and UFP Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFP Industries 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 UFP Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFP Industries has no effect on the direction of United Natural i.e., United Natural and UFP Industries go up and down completely randomly.
Pair Corralation between United Natural and UFP Industries
Assuming the 90 days horizon United Natural Foods is expected to generate 2.61 times more return on investment than UFP Industries. However, United Natural is 2.61 times more volatile than UFP Industries. It trades about 0.21 of its potential returns per unit of risk. UFP Industries is currently generating about 0.13 per unit of risk. If you would invest 1,468 in United Natural Foods on August 30, 2024 and sell it today you would earn a total of 830.00 from holding United Natural Foods or generate 56.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. UFP Industries
Performance |
| Timeline |
| United Natural Foods |
| UFP Industries |
United Natural and UFP Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and UFP Industries
The main advantage of trading using opposite United Natural and UFP Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, UFP Industries 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 UFP Industries will offset losses from the drop in UFP Industries' long position.| United Natural vs. Constellation Software | United Natural vs. GEAR4MUSIC LS 10 | United Natural vs. UPDATE SOFTWARE | United Natural vs. Take Two Interactive Software |
| UFP Industries vs. Svenska Cellulosa Aktiebolaget | UFP Industries vs. Superior Plus Corp | UFP Industries vs. NMI Holdings | UFP Industries vs. SIVERS SEMICONDUCTORS AB |
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 CEOs Directory module to screen CEOs from public companies around the world.
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