Correlation Between United Utilities and AcadeMedia
Can any of the company-specific risk be diversified away by investing in both United Utilities and AcadeMedia 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 AcadeMedia 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 AcadeMedia AB, you can compare the effects of market volatilities on United Utilities and AcadeMedia 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 AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and AcadeMedia.
Diversification Opportunities for United Utilities and AcadeMedia
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and AcadeMedia is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB 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 AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of United Utilities i.e., United Utilities and AcadeMedia go up and down completely randomly.
Pair Corralation between United Utilities and AcadeMedia
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.94 times more return on investment than AcadeMedia. However, United Utilities Group is 1.07 times less risky than AcadeMedia. It trades about 0.14 of its potential returns per unit of risk. AcadeMedia AB is currently generating about -0.03 per unit of risk. If you would invest 101,550 in United Utilities Group on August 28, 2024 and sell it today you would earn a total of 11,800 from holding United Utilities Group or generate 11.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. AcadeMedia AB
Performance |
| Timeline |
| United Utilities |
| AcadeMedia AB |
United Utilities and AcadeMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and AcadeMedia
The main advantage of trading using opposite United Utilities and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, AcadeMedia 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 AcadeMedia will offset losses from the drop in AcadeMedia'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 |
| AcadeMedia vs. Blackrock World Mining | AcadeMedia vs. Endeavour Mining Corp | AcadeMedia vs. JLEN Environmental Assets | AcadeMedia vs. Tata Steel Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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