Correlation Between NETGEAR and United Natural

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

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

Diversification Opportunities for NETGEAR and United Natural

0.07

Correlation Coefficient

NETGEAR  United Natural

Significant diversification

The 3 months correlation between NETGEAR and United is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR 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 NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and United Natural go up and down completely randomly.

Pair Corralation between NETGEAR and United Natural

Given the investment horizon of 90 days NETGEAR is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, NETGEAR is 1.52 times less risky than United Natural. The stock trades about -0.12 of its potential returns per unit of risk. The United Natural Foods is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,632  in United Natural Foods on May 5, 2025 and sell it today you would earn a total of  69.00  from holding United Natural Foods or generate 2.62% return on investment over 90 days.

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

NETGEAR  vs.  United Natural Foods

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, United Natural may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with NETGEAR and United Natural

The main advantage of trading using opposite NETGEAR and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.