Correlation Between EBay and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both EBay 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 EBay and UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eBay Inc and UNITED UTILITIES GR, you can compare the effects of market volatilities on EBay 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 EBay with a short position of UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and UNITED UTILITIES.
Diversification Opportunities for EBay and UNITED UTILITIES
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EBay and UNITED is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding eBay 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 EBay 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 eBay 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 EBay i.e., EBay and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between EBay and UNITED UTILITIES
Assuming the 90 days horizon eBay Inc is expected to generate 1.84 times more return on investment than UNITED UTILITIES. However, EBay is 1.84 times more volatile than UNITED UTILITIES GR. It trades about 0.11 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.19 per unit of risk. If you would invest 5,855 in eBay Inc on August 29, 2024 and sell it today you would earn a total of 366.00 from holding eBay Inc or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eBay Inc vs. UNITED UTILITIES GR
Performance |
| Timeline |
| eBay Inc |
| UNITED UTILITIES |
EBay and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBay and UNITED UTILITIES
The main advantage of trading using opposite EBay and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay 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.| EBay vs. Superior Plus Corp | EBay vs. NMI Holdings | EBay vs. Origin Agritech | EBay vs. SIVERS SEMICONDUCTORS AB |
| UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Microsoft | UNITED UTILITIES vs. Microsoft |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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