Correlation Between UNITED UTILITIES and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on UNITED UTILITIES and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and CDN IMPERIAL.
Diversification Opportunities for UNITED UTILITIES and CDN IMPERIAL
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and CDN is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and CDN IMPERIAL
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 1.87 times more return on investment than CDN IMPERIAL. However, UNITED UTILITIES is 1.87 times more volatile than CDN IMPERIAL BANK. It trades about 0.22 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.38 per unit of risk. If you would invest 1,260 in UNITED UTILITIES GR on August 28, 2024 and sell it today you would earn a total of 90.00 from holding UNITED UTILITIES GR or generate 7.14% 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. CDN IMPERIAL BANK
Performance |
| Timeline |
| UNITED UTILITIES |
| CDN IMPERIAL BANK |
UNITED UTILITIES and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and CDN IMPERIAL
The main advantage of trading using opposite UNITED UTILITIES and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| UNITED UTILITIES vs. JD SPORTS FASH | UNITED UTILITIES vs. Federal Agricultural Mortgage | UNITED UTILITIES vs. Granite Construction | UNITED UTILITIES vs. USWE SPORTS AB |
| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Microsoft |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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