Correlation Between United Utilities and Panasonic Corp
Can any of the company-specific risk be diversified away by investing in both United Utilities and Panasonic 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 Panasonic 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 Panasonic Corp, you can compare the effects of market volatilities on United Utilities and Panasonic 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 Panasonic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Panasonic Corp.
Diversification Opportunities for United Utilities and Panasonic Corp
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Panasonic is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic 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 Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of United Utilities i.e., United Utilities and Panasonic Corp go up and down completely randomly.
Pair Corralation between United Utilities and Panasonic Corp
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the Panasonic Corp. In addition to that, United Utilities is 1.11 times more volatile than Panasonic Corp. It trades about -0.43 of its total potential returns per unit of risk. Panasonic Corp is currently generating about -0.2 per unit of volatility. If you would invest 160,799 in Panasonic Corp on October 16, 2024 and sell it today you would lose (3,599) from holding Panasonic Corp or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 47.37% |
| Values | Daily Returns |
United Utilities Group vs. Panasonic Corp
Performance |
| Timeline |
| United Utilities |
| Panasonic Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
United Utilities and Panasonic Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Panasonic Corp
The main advantage of trading using opposite United Utilities and Panasonic Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Panasonic 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 Panasonic Corp will offset losses from the drop in Panasonic Corp's long position.| United Utilities vs. Smithson Investment Trust | United Utilities vs. McEwen Mining | United Utilities vs. Livermore Investments Group | United Utilities vs. National Beverage Corp |
| Panasonic Corp vs. Coeur Mining | Panasonic Corp vs. Bankers Investment Trust | Panasonic Corp vs. Lundin Mining Corp | Panasonic Corp vs. Futura Medical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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