Correlation Between United Natural and XAAR PLC
Can any of the company-specific risk be diversified away by investing in both United Natural and XAAR PLC 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 XAAR PLC 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 XAAR PLC LS 10, you can compare the effects of market volatilities on United Natural and XAAR PLC 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 XAAR PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and XAAR PLC.
Diversification Opportunities for United Natural and XAAR PLC
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and XAAR is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and XAAR PLC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAAR PLC LS 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 XAAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAAR PLC LS has no effect on the direction of United Natural i.e., United Natural and XAAR PLC go up and down completely randomly.
Pair Corralation between United Natural and XAAR PLC
Assuming the 90 days horizon United Natural Foods is expected to generate 1.42 times more return on investment than XAAR PLC. However, United Natural is 1.42 times more volatile than XAAR PLC LS 10. It trades about 0.14 of its potential returns per unit of risk. XAAR PLC LS 10 is currently generating about -0.38 per unit of risk. If you would invest 1,876 in United Natural Foods on August 25, 2024 and sell it today you would earn a total of 147.00 from holding United Natural Foods or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. XAAR PLC LS 10
Performance |
| Timeline |
| United Natural Foods |
| XAAR PLC LS |
United Natural and XAAR PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and XAAR PLC
The main advantage of trading using opposite United Natural and XAAR PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, XAAR PLC 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 XAAR PLC will offset losses from the drop in XAAR PLC's long position.| United Natural vs. AEON STORES | United Natural vs. National Retail Properties | United Natural vs. CosmoSteel Holdings Limited | United Natural vs. Insteel Industries |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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