Correlation Between Sea and Union Electric
Can any of the company-specific risk be diversified away by investing in both Sea and Union Electric 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 Sea and Union Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Union Electric, you can compare the effects of market volatilities on Sea and Union Electric 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 Sea with a short position of Union Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Union Electric.
Diversification Opportunities for Sea and Union Electric
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sea and Union is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric and Sea 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 Sea are associated (or correlated) with Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of Sea i.e., Sea and Union Electric go up and down completely randomly.
Pair Corralation between Sea and Union Electric
Allowing for the 90-day total investment horizon Sea is expected to generate 17.61 times more return on investment than Union Electric. However, Sea is 17.61 times more volatile than Union Electric. It trades about 0.2 of its potential returns per unit of risk. Union Electric is currently generating about 0.25 per unit of risk. If you would invest 11,147 in Sea on October 25, 2024 and sell it today you would earn a total of 689.00 from holding Sea or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
Sea vs. Union Electric
Performance |
| Timeline |
| Sea |
| Union Electric |
Sea and Union Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Union Electric
The main advantage of trading using opposite Sea and Union Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Union Electric 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 Union Electric will offset losses from the drop in Union Electric's long position.The idea behind Sea and Union Electric pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Union Electric vs. BBB Foods | Union Electric vs. Westrock Coffee | Union Electric vs. Sea | Union Electric vs. Simon Property Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |