Correlation Between Centaur Media and United Utilities
Can any of the company-specific risk be diversified away by investing in both Centaur Media 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 Centaur Media and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaur Media and United Utilities Group, you can compare the effects of market volatilities on Centaur Media 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 Centaur Media with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Media and United Utilities.
Diversification Opportunities for Centaur Media and United Utilities
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Centaur and United is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Media and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Centaur Media 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 Centaur Media 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 Centaur Media i.e., Centaur Media and United Utilities go up and down completely randomly.
Pair Corralation between Centaur Media and United Utilities
Assuming the 90 days trading horizon Centaur Media is expected to generate 2.44 times more return on investment than United Utilities. However, Centaur Media is 2.44 times more volatile than United Utilities Group. It trades about 0.19 of its potential returns per unit of risk. United Utilities Group is currently generating about -0.06 per unit of risk. If you would invest 2,300 in Centaur Media on November 7, 2024 and sell it today you would earn a total of 400.00 from holding Centaur Media or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Centaur Media vs. United Utilities Group
Performance |
| Timeline |
| Centaur Media |
| United Utilities |
Centaur Media and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaur Media and United Utilities
The main advantage of trading using opposite Centaur Media and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Media 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.| Centaur Media vs. Raytheon Technologies Corp | Centaur Media vs. Charter Communications Cl | Centaur Media vs. Polar Capital Technology | Centaur Media vs. Pressure Technologies Plc |
| United Utilities vs. Litigation Capital Management | United Utilities vs. Sovereign Metals | United Utilities vs. Power Metal Resources | United Utilities vs. Wheaton Precious Metals |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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