Correlation Between United Utilities and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both United Utilities and SoftBank Group 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 SoftBank Group 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 SoftBank Group Corp, you can compare the effects of market volatilities on United Utilities and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and SoftBank Group.
Diversification Opportunities for United Utilities and SoftBank Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and SoftBank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of United Utilities i.e., United Utilities and SoftBank Group go up and down completely randomly.
Pair Corralation between United Utilities and SoftBank Group
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the SoftBank Group. But the stock apears to be less risky and, when comparing its historical volatility, United Utilities Group is 1.85 times less risky than SoftBank Group. The stock trades about -0.03 of its potential returns per unit of risk. The SoftBank Group Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 950,000 in SoftBank Group Corp on October 26, 2024 and sell it today you would earn a total of 119,000 from holding SoftBank Group Corp or generate 12.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 67.21% |
| Values | Daily Returns |
United Utilities Group vs. SoftBank Group Corp
Performance |
| Timeline |
| United Utilities |
| SoftBank Group Corp |
United Utilities and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and SoftBank Group
The main advantage of trading using opposite United Utilities and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| United Utilities vs. Verizon Communications | United Utilities vs. Zegona Communications Plc | United Utilities vs. Zoom Video Communications | United Utilities vs. Bisichi Mining PLC |
| SoftBank Group vs. Cairo Communication SpA | SoftBank Group vs. AMG Advanced Metallurgical | SoftBank Group vs. Capital Metals PLC | SoftBank Group vs. Power Metal Resources |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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