Correlation Between United Natural and Gelsenwasser
Can any of the company-specific risk be diversified away by investing in both United Natural and Gelsenwasser 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 Gelsenwasser 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 Gelsenwasser AG, you can compare the effects of market volatilities on United Natural and Gelsenwasser 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 Gelsenwasser. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Gelsenwasser.
Diversification Opportunities for United Natural and Gelsenwasser
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Gelsenwasser is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Gelsenwasser AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelsenwasser 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 Gelsenwasser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelsenwasser AG has no effect on the direction of United Natural i.e., United Natural and Gelsenwasser go up and down completely randomly.
Pair Corralation between United Natural and Gelsenwasser
Assuming the 90 days horizon United Natural Foods is expected to under-perform the Gelsenwasser. In addition to that, United Natural is 1.28 times more volatile than Gelsenwasser AG. It trades about -0.02 of its total potential returns per unit of risk. Gelsenwasser AG is currently generating about -0.02 per unit of volatility. If you would invest 88,530 in Gelsenwasser AG on August 26, 2024 and sell it today you would lose (38,030) from holding Gelsenwasser AG or give up 42.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Gelsenwasser AG
Performance |
| Timeline |
| United Natural Foods |
| Gelsenwasser AG |
United Natural and Gelsenwasser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Gelsenwasser
The main advantage of trading using opposite United Natural and Gelsenwasser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Gelsenwasser 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 Gelsenwasser will offset losses from the drop in Gelsenwasser's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food Group |
| Gelsenwasser vs. Spirent Communications plc | Gelsenwasser vs. SLR Investment Corp | Gelsenwasser vs. Singapore Telecommunications Limited | Gelsenwasser vs. INTERSHOP Communications Aktiengesellschaft |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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