Correlation Between United Natural and National Health
Can any of the company-specific risk be diversified away by investing in both United Natural and National Health 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 National Health 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 National Health Investors, you can compare the effects of market volatilities on United Natural and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and National Health.
Diversification Opportunities for United Natural and National Health
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and National is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of United Natural i.e., United Natural and National Health go up and down completely randomly.
Pair Corralation between United Natural and National Health
Assuming the 90 days horizon United Natural Foods is expected to generate 0.93 times more return on investment than National Health. However, United Natural Foods is 1.08 times less risky than National Health. It trades about 0.36 of its potential returns per unit of risk. National Health Investors is currently generating about 0.11 per unit of risk. If you would invest 1,820 in United Natural Foods on August 29, 2024 and sell it today you would earn a total of 390.00 from holding United Natural Foods or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. National Health Investors
Performance |
| Timeline |
| United Natural Foods |
| National Health Investors |
United Natural and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and National Health
The main advantage of trading using opposite United Natural and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| United Natural vs. DAIRY FARM INTL | United Natural vs. LION ONE METALS | United Natural vs. Sumitomo Mitsui Construction | United Natural vs. WIMFARM SA EO |
| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
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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