Correlation Between UNITED UTILITIES and Comstock Holding

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Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and Comstock Holding 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 Comstock Holding 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 Comstock Holding Companies, you can compare the effects of market volatilities on UNITED UTILITIES and Comstock Holding 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 Comstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Comstock Holding.

Diversification Opportunities for UNITED UTILITIES and Comstock Holding

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between UNITED and Comstock is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Comstock Holding Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Holding Com 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 Comstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Holding Com has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Comstock Holding go up and down completely randomly.

Pair Corralation between UNITED UTILITIES and Comstock Holding

Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.36 times more return on investment than Comstock Holding. However, UNITED UTILITIES GR is 2.74 times less risky than Comstock Holding. It trades about -0.12 of its potential returns per unit of risk. Comstock Holding Companies is currently generating about -0.06 per unit of risk. If you would invest  1,254  in UNITED UTILITIES GR on October 11, 2024 and sell it today you would lose (94.00) from holding UNITED UTILITIES GR or give up 7.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.44%
ValuesDaily Returns

UNITED UTILITIES GR  vs.  Comstock Holding Companies

 Performance 
       Timeline  
UNITED UTILITIES 

Risk-Adjusted Performance

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Strong
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Over the last 90 days UNITED UTILITIES GR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UNITED UTILITIES is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Comstock Holding Com 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Comstock Holding Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

UNITED UTILITIES and Comstock Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UNITED UTILITIES and Comstock Holding

The main advantage of trading using opposite UNITED UTILITIES and Comstock Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Comstock Holding 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 Comstock Holding will offset losses from the drop in Comstock Holding's long position.
The idea behind UNITED UTILITIES GR and Comstock Holding Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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