Correlation Between United Breweries and Waste Management
Can any of the company-specific risk be diversified away by investing in both United Breweries and Waste Management 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 United Breweries and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and Waste Management, you can compare the effects of market volatilities on United Breweries and Waste Management 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 United Breweries with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Waste Management.
Diversification Opportunities for United Breweries and Waste Management
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Waste is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and United Breweries 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 United Breweries Co are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of United Breweries i.e., United Breweries and Waste Management go up and down completely randomly.
Pair Corralation between United Breweries and Waste Management
Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.11 times more return on investment than Waste Management. However, United Breweries is 1.11 times more volatile than Waste Management. It trades about 0.29 of its potential returns per unit of risk. Waste Management is currently generating about -0.07 per unit of risk. If you would invest 986.00 in United Breweries Co on September 12, 2024 and sell it today you would earn a total of 74.00 from holding United Breweries Co or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Breweries Co vs. Waste Management
Performance |
| Timeline |
| United Breweries |
| Waste Management |
United Breweries and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Waste Management
The main advantage of trading using opposite United Breweries and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| Waste Management vs. Harmony Gold Mining | Waste Management vs. Canadian Utilities Limited | Waste Management vs. Zijin Mining Group | Waste Management vs. GRIFFIN MINING LTD |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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