Correlation Between Corporacion America and United Utilities
Can any of the company-specific risk be diversified away by investing in both Corporacion America 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 Corporacion America and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporacion America Airports and United Utilities Group, you can compare the effects of market volatilities on Corporacion America 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 Corporacion America with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion America and United Utilities.
Diversification Opportunities for Corporacion America and United Utilities
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corporacion and United is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Corporacion America 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 Corporacion America Airports 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 Corporacion America i.e., Corporacion America and United Utilities go up and down completely randomly.
Pair Corralation between Corporacion America and United Utilities
Given the investment horizon of 90 days Corporacion America Airports is expected to generate 1.21 times more return on investment than United Utilities. However, Corporacion America is 1.21 times more volatile than United Utilities Group. It trades about 0.09 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 822.00 in Corporacion America Airports on September 13, 2024 and sell it today you would earn a total of 1,204 from holding Corporacion America Airports or generate 146.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.82% |
| Values | Daily Returns |
Corporacion America Airports vs. United Utilities Group
Performance |
| Timeline |
| Corporacion America |
| United Utilities |
Corporacion America and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporacion America and United Utilities
The main advantage of trading using opposite Corporacion America and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporacion America 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.| Corporacion America vs. Grupo Aeroportuario del | Corporacion America vs. Grupo Aeroportuario del | Corporacion America vs. AerSale Corp | Corporacion America vs. Flughafen Zrich AG |
| United Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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