Correlation Between Mitie Group and United Utilities
Can any of the company-specific risk be diversified away by investing in both Mitie Group 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 Mitie Group and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitie Group PLC and United Utilities Group, you can compare the effects of market volatilities on Mitie Group 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 Mitie Group with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitie Group and United Utilities.
Diversification Opportunities for Mitie Group and United Utilities
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitie and United is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group PLC and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Mitie Group 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 Mitie Group PLC 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 Mitie Group i.e., Mitie Group and United Utilities go up and down completely randomly.
Pair Corralation between Mitie Group and United Utilities
Assuming the 90 days trading horizon Mitie Group is expected to generate 1.16 times less return on investment than United Utilities. In addition to that, Mitie Group is 1.19 times more volatile than United Utilities Group. It trades about 0.03 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.04 per unit of volatility. If you would invest 93,299 in United Utilities Group on September 12, 2024 and sell it today you would earn a total of 14,501 from holding United Utilities Group or generate 15.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitie Group PLC vs. United Utilities Group
Performance |
| Timeline |
| Mitie Group PLC |
| United Utilities |
Mitie Group and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitie Group and United Utilities
The main advantage of trading using opposite Mitie Group and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitie Group 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.| Mitie Group vs. United Utilities Group | Mitie Group vs. Ecclesiastical Insurance Office | Mitie Group vs. Zurich Insurance Group | Mitie Group vs. Roebuck Food Group |
| United Utilities vs. Vitec Software Group | United Utilities vs. Ecofin Global Utilities | United Utilities vs. Everyman Media Group | United Utilities vs. Catena Media PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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