Correlation Between United Natural and Intel

Can any of the company-specific risk be diversified away by investing in both United Natural and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on United Natural and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Intel.

Diversification Opportunities for United Natural and Intel

0.45

Correlation Coefficient

United Natural  Intel

Very weak diversification

The 3 months correlation between United and Intel is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of United Natural i.e., United Natural and Intel go up and down completely randomly.

Pair Corralation between United Natural and Intel

Assuming the 90 days horizon United Natural Foods is expected to generate 1.3 times more return on investment than Intel. However, United Natural is 1.3 times more volatile than Intel. It trades about 0.08 of its potential returns per unit of risk. Intel is currently generating about -0.08 per unit of risk. If you would invest  1,500  in United Natural Foods on September 13, 2024 and sell it today you would earn a total of  1,332  from holding United Natural Foods or generate 88.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

United Natural Foods  vs.  Intel

United Natural Foods

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Natural reported solid returns over the last few months and may actually be approaching a breakup point.

Intel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with United Natural and Intel

The main advantage of trading using opposite United Natural and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.

The idea behind United Natural Foods and Intel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.