Correlation Between Apple and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and UNITED UTILITIES GR, you can compare the effects of market volatilities on Apple 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 Apple with a short position of UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and UNITED UTILITIES.
Diversification Opportunities for Apple and UNITED UTILITIES
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apple and UNITED is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES and Apple 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 Apple Inc 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 Apple i.e., Apple and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between Apple and UNITED UTILITIES
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.96 times more return on investment than UNITED UTILITIES. However, Apple Inc is 1.04 times less risky than UNITED UTILITIES. It trades about 0.08 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.02 per unit of risk. If you would invest 14,425 in Apple Inc on November 28, 2024 and sell it today you would earn a total of 9,100 from holding Apple Inc or generate 63.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. UNITED UTILITIES GR
Performance |
| Timeline |
| Apple Inc |
| UNITED UTILITIES |
Apple and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and UNITED UTILITIES
The main advantage of trading using opposite Apple and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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's long position.| Apple vs. Transport International Holdings | Apple vs. SOGECLAIR SA INH | Apple vs. Altair Engineering | Apple vs. Transportadora de Gas |
| UNITED UTILITIES vs. Investment AB Latour | UNITED UTILITIES vs. China Foods Limited | UNITED UTILITIES vs. New Residential Investment | UNITED UTILITIES vs. AGNC Investment Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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