Correlation Between BROADWIND ENRGY and United Utilities
Can any of the company-specific risk be diversified away by investing in both BROADWIND ENRGY 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 BROADWIND ENRGY and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROADWIND ENRGY and United Utilities Group, you can compare the effects of market volatilities on BROADWIND ENRGY 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 BROADWIND ENRGY with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADWIND ENRGY and United Utilities.
Diversification Opportunities for BROADWIND ENRGY and United Utilities
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BROADWIND and United is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BROADWIND ENRGY and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and BROADWIND ENRGY 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 BROADWIND ENRGY 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 BROADWIND ENRGY i.e., BROADWIND ENRGY and United Utilities go up and down completely randomly.
Pair Corralation between BROADWIND ENRGY and United Utilities
Assuming the 90 days trading horizon BROADWIND ENRGY is expected to under-perform the United Utilities. In addition to that, BROADWIND ENRGY is 2.74 times more volatile than United Utilities Group. It trades about -0.02 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.01 per unit of volatility. If you would invest 1,136 in United Utilities Group on October 25, 2024 and sell it today you would earn a total of 44.00 from holding United Utilities Group or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BROADWIND ENRGY vs. United Utilities Group
Performance |
| Timeline |
| BROADWIND ENRGY |
| United Utilities |
BROADWIND ENRGY and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BROADWIND ENRGY and United Utilities
The main advantage of trading using opposite BROADWIND ENRGY and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROADWIND ENRGY 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.| BROADWIND ENRGY vs. Meiko Electronics Co | BROADWIND ENRGY vs. GAZTRTECHNIUADR15EO01 | BROADWIND ENRGY vs. TT Electronics PLC | BROADWIND ENRGY vs. Playtech plc |
| United Utilities vs. American Water Works | United Utilities vs. Guangdong Investment Limited | United Utilities vs. Gelsenwasser AG | United Utilities vs. American States Water |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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