Correlation Between VARIOUS EATERIES and United Utilities
Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES 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 VARIOUS EATERIES and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VARIOUS EATERIES LS and United Utilities Group, you can compare the effects of market volatilities on VARIOUS EATERIES 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 VARIOUS EATERIES with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and United Utilities.
Diversification Opportunities for VARIOUS EATERIES and United Utilities
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VARIOUS and United is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and United Utilities go up and down completely randomly.
Pair Corralation between VARIOUS EATERIES and United Utilities
Assuming the 90 days horizon VARIOUS EATERIES is expected to generate 29.99 times less return on investment than United Utilities. But when comparing it to its historical volatility, VARIOUS EATERIES LS is 1.05 times less risky than United Utilities. It trades about 0.01 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,260 in United Utilities Group on August 29, 2024 and sell it today you would earn a total of 90.00 from holding United Utilities Group or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VARIOUS EATERIES LS vs. United Utilities Group
Performance |
| Timeline |
| VARIOUS EATERIES |
| United Utilities |
VARIOUS EATERIES and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VARIOUS EATERIES and United Utilities
The main advantage of trading using opposite VARIOUS EATERIES and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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.| VARIOUS EATERIES vs. STRAYER EDUCATION | VARIOUS EATERIES vs. GAMING FAC SA | VARIOUS EATERIES vs. GigaMedia | VARIOUS EATERIES vs. TAL Education Group |
| United Utilities vs. Guangdong Investment Limited | United Utilities vs. TTW Public | United Utilities vs. Superior Plus Corp | United Utilities vs. SIVERS SEMICONDUCTORS AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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