Correlation Between Unifirst Corp and Avnet

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Can any of the company-specific risk be diversified away by investing in both Unifirst Corp and Avnet 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 Unifirst Corp and Avnet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unifirst Corp and Avnet Inc, you can compare the effects of market volatilities on Unifirst Corp and Avnet 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 Unifirst Corp with a short position of Avnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unifirst Corp and Avnet.

Diversification Opportunities for Unifirst Corp and Avnet

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Unifirst and Avnet is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Unifirst Corp and Avnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avnet Inc and Unifirst Corp 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 Unifirst Corp are associated (or correlated) with Avnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avnet Inc has no effect on the direction of Unifirst Corp i.e., Unifirst Corp and Avnet go up and down completely randomly.

Pair Corralation between Unifirst Corp and Avnet

Considering the 90-day investment horizon Unifirst Corp is expected to generate 3.09 times less return on investment than Avnet. In addition to that, Unifirst Corp is 1.05 times more volatile than Avnet Inc. It trades about 0.07 of its total potential returns per unit of risk. Avnet Inc is currently generating about 0.23 per unit of volatility. If you would invest  4,019  in Avnet Inc on September 1, 2022 and sell it today you would earn a total of  394.00  from holding Avnet Inc or generate 9.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Unifirst Corp  vs.  Avnet Inc

 Performance (%) 
       Timeline  
Unifirst Corp 
Unifirst Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Unifirst Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Unifirst Corp may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Unifirst Price Channel

Avnet Inc 
Avnet Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Avnet Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Avnet is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Avnet Price Channel

Unifirst Corp and Avnet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Unifirst Corp and Avnet

The main advantage of trading using opposite Unifirst Corp and Avnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unifirst Corp position performs unexpectedly, Avnet 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 Avnet will offset losses from the drop in Avnet's long position.
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The idea behind Unifirst Corp and Avnet Inc 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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