Correlation Between United Utilities and Future Metals
Can any of the company-specific risk be diversified away by investing in both United Utilities and Future Metals 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 Future Metals 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 Future Metals NL, you can compare the effects of market volatilities on United Utilities and Future Metals 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 Future Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Future Metals.
Diversification Opportunities for United Utilities and Future Metals
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Future is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL 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 Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of United Utilities i.e., United Utilities and Future Metals go up and down completely randomly.
Pair Corralation between United Utilities and Future Metals
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.45 times more return on investment than Future Metals. However, United Utilities Group is 2.21 times less risky than Future Metals. It trades about -0.32 of its potential returns per unit of risk. Future Metals NL is currently generating about -0.45 per unit of risk. If you would invest 106,048 in United Utilities Group on October 11, 2024 and sell it today you would lose (8,628) from holding United Utilities Group or give up 8.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Future Metals NL
Performance |
| Timeline |
| United Utilities |
| Future Metals NL |
United Utilities and Future Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Future Metals
The main advantage of trading using opposite United Utilities and Future Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Future Metals 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 Future Metals will offset losses from the drop in Future Metals' long position.| United Utilities vs. Deltex Medical Group | United Utilities vs. Teradata Corp | United Utilities vs. Sunny Optical Technology | United Utilities vs. Allianz Technology Trust |
| Future Metals vs. Eastman Chemical Co | Future Metals vs. Vitec Software Group | Future Metals vs. Alien Metals | Future Metals vs. Air Products Chemicals |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |