Correlation Between United Utilities and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both United Utilities and Teradata Corp 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 Teradata Corp 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 Teradata Corp, you can compare the effects of market volatilities on United Utilities and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Teradata Corp.
Diversification Opportunities for United Utilities and Teradata Corp
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Teradata is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of United Utilities i.e., United Utilities and Teradata Corp go up and down completely randomly.
Pair Corralation between United Utilities and Teradata Corp
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.37 times more return on investment than Teradata Corp. However, United Utilities Group is 2.68 times less risky than Teradata Corp. It trades about 0.32 of its potential returns per unit of risk. Teradata Corp is currently generating about -0.06 per unit of risk. If you would invest 101,136 in United Utilities Group on September 4, 2024 and sell it today you would earn a total of 10,264 from holding United Utilities Group or generate 10.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Utilities Group vs. Teradata Corp
Performance |
| Timeline |
| United Utilities |
| Teradata Corp |
United Utilities and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Teradata Corp
The main advantage of trading using opposite United Utilities and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| United Utilities vs. Herald Investment Trust | United Utilities vs. CVS Health Corp | United Utilities vs. Aurora Investment Trust | United Utilities vs. Inspiration Healthcare Group |
| Teradata Corp vs. Vulcan Materials Co | Teradata Corp vs. Ross Stores | Teradata Corp vs. United Utilities Group | Teradata Corp vs. PureTech Health plc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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