Correlation Between United Natural and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both United Natural and Woolworths Group 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 Woolworths Group 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 Woolworths Group Limited, you can compare the effects of market volatilities on United Natural and Woolworths Group 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Woolworths Group.
Diversification Opportunities for United Natural and Woolworths Group
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Woolworths is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of United Natural i.e., United Natural and Woolworths Group go up and down completely randomly.
Pair Corralation between United Natural and Woolworths Group
Assuming the 90 days horizon United Natural Foods is expected to generate 3.85 times more return on investment than Woolworths Group. However, United Natural is 3.85 times more volatile than Woolworths Group Limited. It trades about 0.17 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.13 per unit of risk. If you would invest 1,494 in United Natural Foods on August 25, 2024 and sell it today you would earn a total of 629.00 from holding United Natural Foods or generate 42.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Woolworths Group Limited
Performance |
| Timeline |
| United Natural Foods |
| Woolworths Group |
United Natural and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Woolworths Group
The main advantage of trading using opposite United Natural and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food Group |
| Woolworths Group vs. DIVERSIFIED ROYALTY | Woolworths Group vs. Chuangs China Investments | Woolworths Group vs. Harmony Gold Mining | Woolworths Group vs. GREENX METALS LTD |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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