Correlation Between United Natural and Walmart
Can any of the company-specific risk be diversified away by investing in both United Natural and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on United Natural and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Walmart.
Diversification Opportunities for United Natural and Walmart
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Walmart is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of United Natural i.e., United Natural and Walmart go up and down completely randomly.
Pair Corralation between United Natural and Walmart
Assuming the 90 days horizon United Natural is expected to generate 2.02 times less return on investment than Walmart. In addition to that, United Natural is 3.4 times more volatile than Walmart. It trades about 0.02 of its total potential returns per unit of risk. Walmart is currently generating about 0.16 per unit of volatility. If you would invest 4,573 in Walmart on August 31, 2024 and sell it today you would earn a total of 4,163 from holding Walmart or generate 91.03% 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. Walmart
Performance |
| Timeline |
| United Natural Foods |
| Walmart |
United Natural and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Walmart
The main advantage of trading using opposite United Natural and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
| Walmart vs. Superior Plus Corp | Walmart vs. NMI Holdings | Walmart vs. Origin Agritech | Walmart 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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