Correlation Between Northern Data and United Utilities
Can any of the company-specific risk be diversified away by investing in both Northern Data 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 Northern Data and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Data AG and United Utilities Group, you can compare the effects of market volatilities on Northern Data 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 Northern Data with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and United Utilities.
Diversification Opportunities for Northern Data and United Utilities
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and United is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Northern Data 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 Northern Data AG 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 Northern Data i.e., Northern Data and United Utilities go up and down completely randomly.
Pair Corralation between Northern Data and United Utilities
Assuming the 90 days trading horizon Northern Data AG is expected to generate 1.72 times more return on investment than United Utilities. However, Northern Data is 1.72 times more volatile than United Utilities Group. It trades about 0.19 of its potential returns per unit of risk. United Utilities Group is currently generating about -0.1 per unit of risk. If you would invest 4,200 in Northern Data AG on October 24, 2024 and sell it today you would earn a total of 555.00 from holding Northern Data AG or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Data AG vs. United Utilities Group
Performance |
| Timeline |
| Northern Data AG |
| United Utilities |
Northern Data and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and United Utilities
The main advantage of trading using opposite Northern Data and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data 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.| Northern Data vs. BANK MANDIRI | Northern Data vs. PT Bank Mandiri | Northern Data vs. BANK MANDIRI | Northern Data vs. BANK MANDIRI |
| United Utilities vs. CN MODERN DAIRY | United Utilities vs. AUSNUTRIA DAIRY | United Utilities vs. X FAB Silicon Foundries | United Utilities vs. Easy Software AG |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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