Correlation Between SIDETRADE and United Utilities
Can any of the company-specific risk be diversified away by investing in both SIDETRADE 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 SIDETRADE and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIDETRADE EO 1 and United Utilities Group, you can compare the effects of market volatilities on SIDETRADE 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 SIDETRADE with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and United Utilities.
Diversification Opportunities for SIDETRADE and United Utilities
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SIDETRADE and United is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and SIDETRADE 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 SIDETRADE EO 1 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 SIDETRADE i.e., SIDETRADE and United Utilities go up and down completely randomly.
Pair Corralation between SIDETRADE and United Utilities
Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 1.27 times more return on investment than United Utilities. However, SIDETRADE is 1.27 times more volatile than United Utilities Group. It trades about 0.06 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.03 per unit of risk. If you would invest 13,800 in SIDETRADE EO 1 on August 28, 2024 and sell it today you would earn a total of 8,700 from holding SIDETRADE EO 1 or generate 63.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIDETRADE EO 1 vs. United Utilities Group
Performance |
| Timeline |
| SIDETRADE EO 1 |
| United Utilities |
SIDETRADE and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIDETRADE and United Utilities
The main advantage of trading using opposite SIDETRADE and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE 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.| SIDETRADE vs. Nemetschek AG ON | SIDETRADE vs. Superior Plus Corp | SIDETRADE vs. NMI Holdings | SIDETRADE vs. Origin Agritech |
| United Utilities vs. Insteel Industries | United Utilities vs. CosmoSteel Holdings Limited | United Utilities vs. Perma Fix Environmental Services | United Utilities vs. Hisense Home Appliances |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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