Correlation Between TOTAL GABON and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON 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 TOTAL GABON and UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and UNITED UTILITIES GR, you can compare the effects of market volatilities on TOTAL GABON 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 TOTAL GABON with a short position of UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and UNITED UTILITIES.
Diversification Opportunities for TOTAL GABON and UNITED UTILITIES
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TOTAL and UNITED is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES and TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON i.e., TOTAL GABON and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between TOTAL GABON and UNITED UTILITIES
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 2.8 times more return on investment than UNITED UTILITIES. However, TOTAL GABON is 2.8 times more volatile than UNITED UTILITIES GR. It trades about 0.21 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.12 per unit of risk. If you would invest 15,750 in TOTAL GABON on September 12, 2024 and sell it today you would earn a total of 2,950 from holding TOTAL GABON or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. UNITED UTILITIES GR
Performance |
| Timeline |
| TOTAL GABON |
| UNITED UTILITIES |
TOTAL GABON and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and UNITED UTILITIES
The main advantage of trading using opposite TOTAL GABON and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON 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's long position.| TOTAL GABON vs. TYSON FOODS A | TOTAL GABON vs. National Beverage Corp | TOTAL GABON vs. Food Life Companies | TOTAL GABON vs. SENECA FOODS A |
| UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc |
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 Correlations module to find global opportunities by holding instruments from different markets.
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