Correlation Between United Natural and BHPA
Can any of the company-specific risk be diversified away by investing in both United Natural and BHPA 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 BHPA 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 BHPA Inc, you can compare the effects of market volatilities on United Natural and BHPA 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 BHPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and BHPA.
Diversification Opportunities for United Natural and BHPA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and BHPA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and BHPA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHPA Inc 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 BHPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHPA Inc has no effect on the direction of United Natural i.e., United Natural and BHPA go up and down completely randomly.
Pair Corralation between United Natural and BHPA
Given the investment horizon of 90 days United Natural Foods is expected to generate 0.31 times more return on investment than BHPA. However, United Natural Foods is 3.25 times less risky than BHPA. It trades about 0.11 of its potential returns per unit of risk. BHPA Inc is currently generating about -0.12 per unit of risk. If you would invest 2,495 in United Natural Foods on October 26, 2024 and sell it today you would earn a total of 399.00 from holding United Natural Foods or generate 15.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
United Natural Foods vs. BHPA Inc
Performance |
| Timeline |
| United Natural Foods |
| BHPA Inc |
United Natural and BHPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and BHPA
The main advantage of trading using opposite United Natural and BHPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, BHPA 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 BHPA will offset losses from the drop in BHPA's long position.| United Natural vs. The Chefs Warehouse | United Natural vs. Mission Produce | United Natural vs. The Andersons | United Natural vs. Performance Food Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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