Correlation Between Superior Plus and United Utilities
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and United Utilities Group, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and United Utilities.
Diversification Opportunities for Superior Plus and United Utilities
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and United is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and United Utilities go up and down completely randomly.
Pair Corralation between Superior Plus and United Utilities
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the United Utilities. In addition to that, Superior Plus is 1.33 times more volatile than United Utilities Group. It trades about -0.04 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.04 per unit of volatility. If you would invest 1,184 in United Utilities Group on September 1, 2024 and sell it today you would earn a total of 166.00 from holding United Utilities Group or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. United Utilities Group
Performance |
| Timeline |
| Superior Plus Corp |
| United Utilities |
Superior Plus and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and United Utilities
The main advantage of trading using opposite Superior Plus and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. TSOGO SUN GAMING | Superior Plus vs. FUTURE GAMING GRP | Superior Plus vs. TROPHY GAMES DEV | Superior Plus vs. Boyd Gaming |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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