Correlation Between Talanx AG and United Utilities
Can any of the company-specific risk be diversified away by investing in both Talanx AG 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 Talanx AG and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and United Utilities Group, you can compare the effects of market volatilities on Talanx AG 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 Talanx AG with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and United Utilities.
Diversification Opportunities for Talanx AG and United Utilities
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Talanx and United is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Talanx AG 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 Talanx AG 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 Talanx AG i.e., Talanx AG and United Utilities go up and down completely randomly.
Pair Corralation between Talanx AG and United Utilities
Assuming the 90 days horizon Talanx AG is expected to generate 0.84 times more return on investment than United Utilities. However, Talanx AG is 1.2 times less risky than United Utilities. It trades about 0.11 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.04 per unit of risk. If you would invest 4,081 in Talanx AG on September 12, 2024 and sell it today you would earn a total of 4,319 from holding Talanx AG or generate 105.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talanx AG vs. United Utilities Group
Performance |
| Timeline |
| Talanx AG |
| United Utilities |
Talanx AG and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and United Utilities
The main advantage of trading using opposite Talanx AG and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG 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.| Talanx AG vs. Food Life Companies | Talanx AG vs. Tyson Foods | Talanx AG vs. Lery Seafood Group | Talanx AG vs. EEDUCATION ALBERT AB |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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