Correlation Between UNITED UTILITIES and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and Hochschild Mining 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 Hochschild Mining 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 Hochschild Mining plc, you can compare the effects of market volatilities on UNITED UTILITIES and Hochschild Mining 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 Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Hochschild Mining.
Diversification Opportunities for UNITED UTILITIES and Hochschild Mining
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNITED and Hochschild is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining plc 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 Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Hochschild Mining go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and Hochschild Mining
Assuming the 90 days trading horizon UNITED UTILITIES is expected to generate 3.49 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, UNITED UTILITIES GR is 2.21 times less risky than Hochschild Mining. It trades about 0.16 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Hochschild Mining plc on September 14, 2024 and sell it today you would earn a total of 41.00 from holding Hochschild Mining plc or generate 16.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. Hochschild Mining plc
Performance |
| Timeline |
| UNITED UTILITIES |
| Hochschild Mining plc |
UNITED UTILITIES and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and Hochschild Mining
The main advantage of trading using opposite UNITED UTILITIES and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining's long position.| UNITED UTILITIES vs. National Retail Properties | UNITED UTILITIES vs. QURATE RETAIL INC | UNITED UTILITIES vs. Sumitomo Rubber Industries | UNITED UTILITIES vs. GOODYEAR T RUBBER |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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