Correlation Between UNITED UTILITIES and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and INVITATION HOMES 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 INVITATION HOMES 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 INVITATION HOMES DL, you can compare the effects of market volatilities on UNITED UTILITIES and INVITATION HOMES 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 INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and INVITATION HOMES.
Diversification Opportunities for UNITED UTILITIES and INVITATION HOMES
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and INVITATION is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and INVITATION HOMES go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and INVITATION HOMES
Assuming the 90 days trading horizon UNITED UTILITIES is expected to generate 1.89 times less return on investment than INVITATION HOMES. In addition to that, UNITED UTILITIES is 1.06 times more volatile than INVITATION HOMES DL. It trades about 0.01 of its total potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.02 per unit of volatility. If you would invest 2,662 in INVITATION HOMES DL on October 14, 2024 and sell it today you would earn a total of 298.00 from holding INVITATION HOMES DL or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. INVITATION HOMES DL
Performance |
| Timeline |
| UNITED UTILITIES |
| INVITATION HOMES |
UNITED UTILITIES and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and INVITATION HOMES
The main advantage of trading using opposite UNITED UTILITIES and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| UNITED UTILITIES vs. PARKEN Sport Entertainment | UNITED UTILITIES vs. MINCO SILVER | UNITED UTILITIES vs. Fortescue Metals Group | UNITED UTILITIES vs. GEAR4MUSIC LS 10 |
| INVITATION HOMES vs. ADRIATIC METALS LS 013355 | INVITATION HOMES vs. VIVA WINE GROUP | INVITATION HOMES vs. Jacquet Metal Service | INVITATION HOMES vs. UNITED UTILITIES GR |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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