Correlation Between United Utilities and Mitie Group
Can any of the company-specific risk be diversified away by investing in both United Utilities and Mitie 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 Mitie 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 Mitie Group PLC, you can compare the effects of market volatilities on United Utilities and Mitie 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 Mitie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Mitie Group.
Diversification Opportunities for United Utilities and Mitie Group
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Mitie is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Mitie Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitie Group PLC 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 Mitie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitie Group PLC has no effect on the direction of United Utilities i.e., United Utilities and Mitie Group go up and down completely randomly.
Pair Corralation between United Utilities and Mitie Group
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.85 times more return on investment than Mitie Group. However, United Utilities Group is 1.18 times less risky than Mitie Group. It trades about 0.14 of its potential returns per unit of risk. Mitie Group PLC is currently generating about -0.01 per unit of risk. If you would invest 103,057 in United Utilities Group on September 13, 2024 and sell it today you would earn a total of 3,993 from holding United Utilities Group or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Mitie Group PLC
Performance |
| Timeline |
| United Utilities |
| Mitie Group PLC |
United Utilities and Mitie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Mitie Group
The main advantage of trading using opposite United Utilities and Mitie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Mitie 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 Mitie Group will offset losses from the drop in Mitie Group's long position.| United Utilities vs. Toyota Motor Corp | United Utilities vs. SoftBank Group Corp | United Utilities vs. OTP Bank Nyrt | United Utilities vs. Hartford Financial Services |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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