Correlation Between Atresmedia and United Utilities
Can any of the company-specific risk be diversified away by investing in both Atresmedia 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 Atresmedia and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atresmedia and United Utilities Group, you can compare the effects of market volatilities on Atresmedia 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 Atresmedia with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atresmedia and United Utilities.
Diversification Opportunities for Atresmedia and United Utilities
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Atresmedia and United is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Atresmedia and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Atresmedia 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 Atresmedia 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 Atresmedia i.e., Atresmedia and United Utilities go up and down completely randomly.
Pair Corralation between Atresmedia and United Utilities
Assuming the 90 days trading horizon Atresmedia is expected to generate 3.67 times less return on investment than United Utilities. But when comparing it to its historical volatility, Atresmedia is 1.34 times less risky than United Utilities. It trades about 0.09 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 105,100 in United Utilities Group on August 28, 2024 and sell it today you would earn a total of 8,250 from holding United Utilities Group or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atresmedia vs. United Utilities Group
Performance |
| Timeline |
| Atresmedia |
| United Utilities |
Atresmedia and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atresmedia and United Utilities
The main advantage of trading using opposite Atresmedia and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atresmedia 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.| Atresmedia vs. Samsung Electronics Co | Atresmedia vs. Samsung Electronics Co | Atresmedia vs. Hyundai Motor | Atresmedia vs. Toyota Motor Corp |
| United Utilities vs. Tlou Energy | United Utilities vs. Ikigai Ventures | United Utilities vs. Falcon Oil Gas | United Utilities vs. Golden Metal Resources |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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