Correlation Between Amedeo Air and United Utilities
Can any of the company-specific risk be diversified away by investing in both Amedeo Air 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 Amedeo Air and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedeo Air Four and United Utilities Group, you can compare the effects of market volatilities on Amedeo Air 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 Amedeo Air with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedeo Air and United Utilities.
Diversification Opportunities for Amedeo Air and United Utilities
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amedeo and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amedeo Air Four and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Amedeo Air 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 Amedeo Air Four 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 Amedeo Air i.e., Amedeo Air and United Utilities go up and down completely randomly.
Pair Corralation between Amedeo Air and United Utilities
Assuming the 90 days trading horizon Amedeo Air Four is expected to generate 0.59 times more return on investment than United Utilities. However, Amedeo Air Four is 1.69 times less risky than United Utilities. It trades about 0.24 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.09 per unit of risk. If you would invest 4,025 in Amedeo Air Four on August 31, 2024 and sell it today you would earn a total of 1,295 from holding Amedeo Air Four or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amedeo Air Four vs. United Utilities Group
Performance |
| Timeline |
| Amedeo Air Four |
| United Utilities |
Amedeo Air and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amedeo Air and United Utilities
The main advantage of trading using opposite Amedeo Air and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedeo Air 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.| Amedeo Air vs. Zinc Media Group | Amedeo Air vs. Litigation Capital Management | Amedeo Air vs. Liontrust Asset Management | Amedeo Air vs. One Media iP |
| United Utilities vs. MyHealthChecked Plc | United Utilities vs. PureTech Health plc | United Utilities vs. Abingdon Health Plc | United Utilities vs. Home Depot |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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