Correlation Between UNITED UTILITIES and MSCI
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and MSCI 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 MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and MSCI Inc, you can compare the effects of market volatilities on UNITED UTILITIES and MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and MSCI.
Diversification Opportunities for UNITED UTILITIES and MSCI
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and MSCI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc 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 GR are associated (or correlated) with MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and MSCI go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and MSCI
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 1.2 times more return on investment than MSCI. However, UNITED UTILITIES is 1.2 times more volatile than MSCI Inc. It trades about 0.21 of its potential returns per unit of risk. MSCI Inc is currently generating about 0.24 per unit of risk. If you would invest 1,224 in UNITED UTILITIES GR on September 13, 2024 and sell it today you would earn a total of 76.00 from holding UNITED UTILITIES GR or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. MSCI Inc
Performance |
| Timeline |
| UNITED UTILITIES |
| MSCI Inc |
UNITED UTILITIES and MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and MSCI
The main advantage of trading using opposite UNITED UTILITIES and MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, MSCI 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 MSCI will offset losses from the drop in MSCI's long position.| UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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