Correlation Between United Natural and Carsales
Can any of the company-specific risk be diversified away by investing in both United Natural and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on United Natural and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Carsales.
Diversification Opportunities for United Natural and Carsales
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Carsales is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of United Natural i.e., United Natural and Carsales go up and down completely randomly.
Pair Corralation between United Natural and Carsales
Assuming the 90 days horizon United Natural Foods is expected to under-perform the Carsales. In addition to that, United Natural is 2.38 times more volatile than Carsales. It trades about -0.01 of its total potential returns per unit of risk. Carsales is currently generating about 0.09 per unit of volatility. If you would invest 1,282 in Carsales on August 28, 2024 and sell it today you would earn a total of 1,258 from holding Carsales or generate 98.13% 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. Carsales
Performance |
| Timeline |
| United Natural Foods |
| Carsales |
United Natural and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Carsales
The main advantage of trading using opposite United Natural and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| United Natural vs. Lion One Metals | United Natural vs. LION ONE METALS | United Natural vs. GREENX METALS LTD | United Natural vs. Harmony Gold Mining |
| Carsales vs. BioNTech SE | Carsales vs. BOSTON BEER A | Carsales vs. Thai Beverage Public | Carsales vs. Fevertree Drinks PLC |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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