Correlation Between Livermore Investments and United Utilities
Can any of the company-specific risk be diversified away by investing in both Livermore Investments 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 Livermore Investments and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livermore Investments Group and United Utilities Group, you can compare the effects of market volatilities on Livermore Investments 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 Livermore Investments with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and United Utilities.
Diversification Opportunities for Livermore Investments and United Utilities
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Livermore and United is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments 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 Livermore Investments 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 Livermore Investments 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 Livermore Investments i.e., Livermore Investments and United Utilities go up and down completely randomly.
Pair Corralation between Livermore Investments and United Utilities
Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 1.49 times more return on investment than United Utilities. However, Livermore Investments is 1.49 times more volatile than United Utilities Group. It trades about 0.04 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.0 per unit of risk. If you would invest 3,939 in Livermore Investments Group on October 16, 2024 and sell it today you would earn a total of 1,311 from holding Livermore Investments Group or generate 33.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livermore Investments Group vs. United Utilities Group
Performance |
| Timeline |
| Livermore Investments |
| United Utilities |
Livermore Investments and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livermore Investments and United Utilities
The main advantage of trading using opposite Livermore Investments and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments 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.| Livermore Investments vs. Adriatic Metals | Livermore Investments vs. Bisichi Mining PLC | Livermore Investments vs. Cornish Metals | Livermore Investments vs. Air Products Chemicals |
| United Utilities vs. Smithson Investment Trust | United Utilities vs. McEwen Mining | United Utilities vs. Livermore Investments Group | United Utilities vs. National Beverage Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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