Correlation Between CN MODERN and United Utilities
Can any of the company-specific risk be diversified away by investing in both CN MODERN and United Utilities 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 CN MODERN and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and United Utilities Group, you can compare the effects of market volatilities on CN MODERN and United Utilities 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 CN MODERN with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and United Utilities.
Diversification Opportunities for CN MODERN and United Utilities
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 07M and United is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of CN MODERN i.e., CN MODERN and United Utilities go up and down completely randomly.
Pair Corralation between CN MODERN and United Utilities
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 1.28 times more return on investment than United Utilities. However, CN MODERN is 1.28 times more volatile than United Utilities Group. It trades about 0.02 of its potential returns per unit of risk. United Utilities Group is currently generating about -0.09 per unit of risk. If you would invest 11.00 in CN MODERN DAIRY on November 3, 2024 and sell it today you would earn a total of 0.00 from holding CN MODERN DAIRY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. United Utilities Group
Performance |
| Timeline |
| CN MODERN DAIRY |
| United Utilities |
CN MODERN and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and United Utilities
The main advantage of trading using opposite CN MODERN and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, United Utilities 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 Utilities will offset losses from the drop in United Utilities' long position.| CN MODERN vs. Alliance Data Systems | CN MODERN vs. AGNC INVESTMENT | CN MODERN vs. New Residential Investment | CN MODERN vs. DATAGROUP SE |
| United Utilities vs. Ribbon Communications | United Utilities vs. GMO Internet | United Utilities vs. Computershare Limited | United Utilities vs. HEMISPHERE EGY |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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