Correlation Between Arm Holdings and United Natural

Can any of the company-specific risk be diversified away by investing in both Arm Holdings and United Natural 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 Arm Holdings and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arm Holdings plc and United Natural Foods, you can compare the effects of market volatilities on Arm Holdings and United Natural 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 Arm Holdings with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and United Natural.

Diversification Opportunities for Arm Holdings and United Natural

-0.41

Correlation Coefficient

Arm Holdings  United Natural

Very good diversification

The 3 months correlation between Arm and United is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of Arm Holdings i.e., Arm Holdings and United Natural go up and down completely randomly.

Pair Corralation between Arm Holdings and United Natural

Considering the 90-day investment horizon Arm Holdings plc is expected to generate 0.91 times more return on investment than United Natural. However, Arm Holdings plc is 1.1 times less risky than United Natural. It trades about 0.07 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.02 per unit of risk. If you would invest  12,244  in Arm Holdings plc on May 6, 2025 and sell it today you would earn a total of  1,514  from holding Arm Holdings plc or generate 12.37% return on investment over 90 days.

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

Arm Holdings plc  vs.  United Natural Foods

Arm Holdings plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arm Holdings plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Arm Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

United Natural Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, United Natural is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Arm Holdings and United Natural

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

The idea behind Arm Holdings plc and United Natural Foods 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.