Correlation Between STANDARD CHARTUNSPADR2 and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both STANDARD CHARTUNSPADR2 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 STANDARD CHARTUNSPADR2 and UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STANDARD CHARTUNSPADR2 and UNITED UTILITIES GR, you can compare the effects of market volatilities on STANDARD CHARTUNSPADR2 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 STANDARD CHARTUNSPADR2 with a short position of UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD CHARTUNSPADR2 and UNITED UTILITIES.
Diversification Opportunities for STANDARD CHARTUNSPADR2 and UNITED UTILITIES
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STANDARD and UNITED is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD CHARTUNSPADR2 and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES and STANDARD CHARTUNSPADR2 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 STANDARD CHARTUNSPADR2 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 STANDARD CHARTUNSPADR2 i.e., STANDARD CHARTUNSPADR2 and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between STANDARD CHARTUNSPADR2 and UNITED UTILITIES
Assuming the 90 days trading horizon STANDARD CHARTUNSPADR2 is expected to generate 1.47 times more return on investment than UNITED UTILITIES. However, STANDARD CHARTUNSPADR2 is 1.47 times more volatile than UNITED UTILITIES GR. It trades about 0.06 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.04 per unit of risk. If you would invest 1,274 in STANDARD CHARTUNSPADR2 on September 13, 2024 and sell it today you would earn a total of 1,006 from holding STANDARD CHARTUNSPADR2 or generate 78.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STANDARD CHARTUNSPADR2 vs. UNITED UTILITIES GR
Performance |
| Timeline |
| STANDARD CHARTUNSPADR2 |
| UNITED UTILITIES |
STANDARD CHARTUNSPADR2 and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STANDARD CHARTUNSPADR2 and UNITED UTILITIES
The main advantage of trading using opposite STANDARD CHARTUNSPADR2 and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STANDARD CHARTUNSPADR2 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.| STANDARD CHARTUNSPADR2 vs. UNITED UTILITIES GR | STANDARD CHARTUNSPADR2 vs. Strategic Investments AS | STANDARD CHARTUNSPADR2 vs. Check Point Software | STANDARD CHARTUNSPADR2 vs. AECOM TECHNOLOGY |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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