Correlation Between UNITED UTILITIES and Collins Foods
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and Collins Foods 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 Collins Foods 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 Collins Foods Limited, you can compare the effects of market volatilities on UNITED UTILITIES and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Collins Foods.
Diversification Opportunities for UNITED UTILITIES and Collins Foods
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNITED and Collins is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Collins Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods Limited 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods Limited has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Collins Foods go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and Collins Foods
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.72 times more return on investment than Collins Foods. However, UNITED UTILITIES GR is 1.39 times less risky than Collins Foods. It trades about 0.05 of its potential returns per unit of risk. Collins Foods Limited is currently generating about 0.0 per unit of risk. If you would invest 1,146 in UNITED UTILITIES GR on September 4, 2024 and sell it today you would earn a total of 194.00 from holding UNITED UTILITIES GR or generate 16.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. Collins Foods Limited
Performance |
| Timeline |
| UNITED UTILITIES |
| Collins Foods Limited |
UNITED UTILITIES and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and Collins Foods
The main advantage of trading using opposite UNITED UTILITIES and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| UNITED UTILITIES vs. TOTAL GABON | UNITED UTILITIES vs. Walgreens Boots Alliance | UNITED UTILITIES vs. Peak Resources Limited |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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