Correlation Between Thor Mining and United Utilities
Can any of the company-specific risk be diversified away by investing in both Thor Mining 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 Thor Mining and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Mining PLC and United Utilities Group, you can compare the effects of market volatilities on Thor Mining 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 Thor Mining with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Mining and United Utilities.
Diversification Opportunities for Thor Mining and United Utilities
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thor and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining PLC and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Thor Mining 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 Thor Mining PLC 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 Thor Mining i.e., Thor Mining and United Utilities go up and down completely randomly.
Pair Corralation between Thor Mining and United Utilities
Assuming the 90 days trading horizon Thor Mining PLC is expected to generate 6.12 times more return on investment than United Utilities. However, Thor Mining is 6.12 times more volatile than United Utilities Group. It trades about 0.12 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.03 per unit of risk. If you would invest 65.00 in Thor Mining PLC on November 27, 2024 and sell it today you would earn a total of 9.00 from holding Thor Mining PLC or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Mining PLC vs. United Utilities Group
Performance |
| Timeline |
| Thor Mining PLC |
| United Utilities |
Thor Mining and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Mining and United Utilities
The main advantage of trading using opposite Thor Mining and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Mining 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.| Thor Mining vs. Sovereign Metals | Thor Mining vs. Capital Metals PLC | Thor Mining vs. Molson Coors Beverage | Thor Mining vs. URU Metals |
| United Utilities vs. Beowulf Mining | United Utilities vs. Symphony Environmental Technologies | United Utilities vs. Hochschild Mining plc | United Utilities vs. Endeavour Mining Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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