Correlation Between UNITED UTILITIES and Amazon
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on UNITED UTILITIES and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Amazon.
Diversification Opportunities for UNITED UTILITIES and Amazon
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and Amazon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Amazon go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and Amazon
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.67 times more return on investment than Amazon. However, UNITED UTILITIES GR is 1.49 times less risky than Amazon. It trades about 0.38 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.22 per unit of risk. If you would invest 1,195 in UNITED UTILITIES GR on September 1, 2024 and sell it today you would earn a total of 145.00 from holding UNITED UTILITIES GR or generate 12.13% 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. Amazon Inc
Performance |
| Timeline |
| UNITED UTILITIES |
| Amazon Inc |
UNITED UTILITIES and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and Amazon
The main advantage of trading using opposite UNITED UTILITIES and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| UNITED UTILITIES vs. Soken Chemical Engineering | UNITED UTILITIES vs. EAGLE MATERIALS | UNITED UTILITIES vs. GEAR4MUSIC LS 10 | UNITED UTILITIES vs. Siamgas And Petrochemicals |
| Amazon vs. SEKISUI CHEMICAL | Amazon vs. UNITED UTILITIES GR | Amazon vs. Algonquin Power Utilities | Amazon vs. Aluminum of |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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