Correlation Between SIRIUS XM and United Utilities
Can any of the company-specific risk be diversified away by investing in both SIRIUS XM 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 SIRIUS XM and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIRIUS XM RADIO and United Utilities Group, you can compare the effects of market volatilities on SIRIUS XM 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 SIRIUS XM with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIRIUS XM and United Utilities.
Diversification Opportunities for SIRIUS XM and United Utilities
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIRIUS and United is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SIRIUS XM RADIO and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and SIRIUS XM 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 SIRIUS XM RADIO 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 SIRIUS XM i.e., SIRIUS XM and United Utilities go up and down completely randomly.
Pair Corralation between SIRIUS XM and United Utilities
Assuming the 90 days trading horizon SIRIUS XM RADIO is expected to under-perform the United Utilities. In addition to that, SIRIUS XM is 1.8 times more volatile than United Utilities Group. It trades about -0.06 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 1,184 in United Utilities Group on September 1, 2024 and sell it today you would earn a total of 166.00 from holding United Utilities Group or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIRIUS XM RADIO vs. United Utilities Group
Performance |
| Timeline |
| SIRIUS XM RADIO |
| United Utilities |
SIRIUS XM and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIRIUS XM and United Utilities
The main advantage of trading using opposite SIRIUS XM and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIRIUS XM 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.| SIRIUS XM vs. SIVERS SEMICONDUCTORS AB | SIRIUS XM vs. Darden Restaurants | SIRIUS XM vs. Reliance Steel Aluminum | SIRIUS XM vs. Q2M Managementberatung AG |
| United Utilities vs. Vastned Retail NV | United Utilities vs. RETAIL FOOD GROUP | United Utilities vs. Caseys General Stores | United Utilities vs. BURLINGTON STORES |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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