Correlation Between Logistics Development and United Utilities
Can any of the company-specific risk be diversified away by investing in both Logistics Development 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 Logistics Development and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Logistics Development Group and United Utilities Group, you can compare the effects of market volatilities on Logistics Development 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 Logistics Development with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logistics Development and United Utilities.
Diversification Opportunities for Logistics Development and United Utilities
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Logistics and United is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Logistics Development Group and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Logistics Development 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 Logistics Development Group 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 Logistics Development i.e., Logistics Development and United Utilities go up and down completely randomly.
Pair Corralation between Logistics Development and United Utilities
Assuming the 90 days trading horizon Logistics Development Group is expected to generate 1.86 times more return on investment than United Utilities. However, Logistics Development is 1.86 times more volatile than United Utilities Group. It trades about 0.01 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.01 per unit of risk. If you would invest 1,540 in Logistics Development Group on November 1, 2024 and sell it today you would lose (40.00) from holding Logistics Development Group or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Logistics Development Group vs. United Utilities Group
Performance |
| Timeline |
| Logistics Development |
| United Utilities |
Logistics Development and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Logistics Development and United Utilities
The main advantage of trading using opposite Logistics Development and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logistics Development 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.| Logistics Development vs. Walmart | Logistics Development vs. BYD Co | Logistics Development vs. Volkswagen AG | Logistics Development vs. Volkswagen AG Non Vtg |
| United Utilities vs. Alfa Financial Software | United Utilities vs. Eastman Chemical Co | United Utilities vs. Compagnie Plastic Omnium | United Utilities vs. Auction Technology Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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