Correlation Between UNITED UTILITIES and AUST AGRICULTURAL
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL, you can compare the effects of market volatilities on UNITED UTILITIES and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and AUST AGRICULTURAL.
Diversification Opportunities for UNITED UTILITIES and AUST AGRICULTURAL
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UNITED and AUST is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and AUST AGRICULTURAL go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and AUST AGRICULTURAL
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.88 times more return on investment than AUST AGRICULTURAL. However, UNITED UTILITIES GR is 1.13 times less risky than AUST AGRICULTURAL. It trades about 0.04 of its potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.01 per unit of risk. If you would invest 1,126 in UNITED UTILITIES GR on August 31, 2024 and sell it today you would earn a total of 214.00 from holding UNITED UTILITIES GR or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. AUST AGRICULTURAL
Performance |
| Timeline |
| UNITED UTILITIES |
| AUST AGRICULTURAL |
UNITED UTILITIES and AUST AGRICULTURAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and AUST AGRICULTURAL
The main advantage of trading using opposite UNITED UTILITIES and AUST AGRICULTURAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, AUST AGRICULTURAL 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 AUST AGRICULTURAL will offset losses from the drop in AUST AGRICULTURAL's long position.| UNITED UTILITIES vs. SIVERS SEMICONDUCTORS AB | UNITED UTILITIES vs. Darden Restaurants | UNITED UTILITIES vs. Reliance Steel Aluminum | UNITED UTILITIES vs. Q2M Managementberatung AG |
| AUST AGRICULTURAL vs. SIVERS SEMICONDUCTORS AB | AUST AGRICULTURAL vs. Darden Restaurants | AUST AGRICULTURAL vs. Reliance Steel Aluminum | AUST AGRICULTURAL vs. Q2M Managementberatung AG |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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