Correlation Between BE Semiconductor and United Utilities
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor 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 BE Semiconductor and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and United Utilities Group, you can compare the effects of market volatilities on BE Semiconductor 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 BE Semiconductor with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and United Utilities.
Diversification Opportunities for BE Semiconductor and United Utilities
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 0XVE and United is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and BE Semiconductor 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 BE Semiconductor Industries 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 BE Semiconductor i.e., BE Semiconductor and United Utilities go up and down completely randomly.
Pair Corralation between BE Semiconductor and United Utilities
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to under-perform the United Utilities. In addition to that, BE Semiconductor is 1.67 times more volatile than United Utilities Group. It trades about -0.1 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 104,100 in United Utilities Group on November 4, 2024 and sell it today you would lose (1,800) from holding United Utilities Group or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. United Utilities Group
Performance |
| Timeline |
| BE Semiconductor Ind |
| United Utilities |
BE Semiconductor and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and United Utilities
The main advantage of trading using opposite BE Semiconductor and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor 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.| BE Semiconductor vs. Evolution Gaming Group | BE Semiconductor vs. Mobile Tornado Group | BE Semiconductor vs. Livermore Investments Group | BE Semiconductor vs. Monks Investment Trust |
| United Utilities vs. Logitech International SA | United Utilities vs. Zurich Insurance Group | United Utilities vs. Infineon Technologies AG | United Utilities vs. Axway Software SA |
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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