Correlation Between United Natural and BOS Better
Can any of the company-specific risk be diversified away by investing in both United Natural and BOS Better 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 BOS Better 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 BOS Better Online, you can compare the effects of market volatilities on United Natural and BOS Better 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 BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and BOS Better.
Diversification Opportunities for United Natural and BOS Better
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and BOS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of United Natural i.e., United Natural and BOS Better go up and down completely randomly.
Pair Corralation between United Natural and BOS Better
Given the investment horizon of 90 days United Natural Foods is expected to generate 1.91 times more return on investment than BOS Better. However, United Natural is 1.91 times more volatile than BOS Better Online. It trades about 0.14 of its potential returns per unit of risk. BOS Better Online is currently generating about 0.09 per unit of risk. If you would invest 1,522 in United Natural Foods on October 26, 2024 and sell it today you would earn a total of 1,314 from holding United Natural Foods or generate 86.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. BOS Better Online
Performance |
| Timeline |
| United Natural Foods |
| BOS Better Online |
United Natural and BOS Better Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and BOS Better
The main advantage of trading using opposite United Natural and BOS Better positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, BOS Better 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 BOS Better will offset losses from the drop in BOS Better'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 |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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