Correlation Between Global Net and United Utilities
Can any of the company-specific risk be diversified away by investing in both Global Net 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 Global Net and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and United Utilities Group, you can compare the effects of market volatilities on Global Net 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 Global Net with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and United Utilities.
Diversification Opportunities for Global Net and United Utilities
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and United is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and United Utilities go up and down completely randomly.
Pair Corralation between Global Net and United Utilities
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the United Utilities. In addition to that, Global Net is 1.63 times more volatile than United Utilities Group. It trades about 0.0 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.03 per unit of volatility. If you would invest 104,077 in United Utilities Group on September 3, 2024 and sell it today you would earn a total of 7,573 from holding United Utilities Group or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. United Utilities Group
Performance |
| Timeline |
| Global Net Lease |
| United Utilities |
Global Net and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and United Utilities
The main advantage of trading using opposite Global Net and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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.| Global Net vs. Catalyst Media Group | Global Net vs. CATLIN GROUP | Global Net vs. RTW Venture Fund | Global Net vs. Secure Property Development |
| United Utilities vs. Hyundai Motor | United Utilities vs. Toyota Motor Corp | United Utilities vs. SoftBank Group Corp | United Utilities vs. Halyk Bank of |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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