Correlation Between United Utilities and Qurate Retail
Can any of the company-specific risk be diversified away by investing in both United Utilities and Qurate Retail 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 United Utilities and Qurate Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and Qurate Retail Series, you can compare the effects of market volatilities on United Utilities and Qurate Retail 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 United Utilities with a short position of Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Qurate Retail.
Diversification Opportunities for United Utilities and Qurate Retail
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Qurate is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series and United Utilities 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 United Utilities Group are associated (or correlated) with Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of United Utilities i.e., United Utilities and Qurate Retail go up and down completely randomly.
Pair Corralation between United Utilities and Qurate Retail
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.27 times more return on investment than Qurate Retail. However, United Utilities Group is 3.71 times less risky than Qurate Retail. It trades about 0.25 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.17 per unit of risk. If you would invest 105,100 in United Utilities Group on August 28, 2024 and sell it today you would earn a total of 8,250 from holding United Utilities Group or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Qurate Retail Series
Performance |
| Timeline |
| United Utilities |
| Qurate Retail Series |
United Utilities and Qurate Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Qurate Retail
The main advantage of trading using opposite United Utilities and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Qurate Retail 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 Qurate Retail will offset losses from the drop in Qurate Retail's long position.| United Utilities vs. Tlou Energy | United Utilities vs. Ikigai Ventures | United Utilities vs. Falcon Oil Gas | United Utilities vs. Golden Metal Resources |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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