Correlation Between UNITED UTILITIES and Industrial
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and Industrial 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 Industrial 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 Industrial and Commercial, you can compare the effects of market volatilities on UNITED UTILITIES and Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Industrial.
Diversification Opportunities for UNITED UTILITIES and Industrial
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UNITED and Industrial is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Industrial go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and Industrial
Assuming the 90 days trading horizon UNITED UTILITIES is expected to generate 1.08 times less return on investment than Industrial. But when comparing it to its historical volatility, UNITED UTILITIES GR is 1.63 times less risky than Industrial. It trades about 0.06 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 50.00 in Industrial and Commercial on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Industrial and Commercial or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. Industrial and Commercial
Performance |
| Timeline |
| UNITED UTILITIES |
| Industrial and Commercial |
UNITED UTILITIES and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and Industrial
The main advantage of trading using opposite UNITED UTILITIES and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.| UNITED UTILITIES vs. ANTA SPORTS PRODUCT | UNITED UTILITIES vs. Transport International Holdings | UNITED UTILITIES vs. Sqs Software Quality | UNITED UTILITIES vs. PSI Software AG |
| Industrial vs. Transport International Holdings | Industrial vs. Broadwind | Industrial vs. Liberty Broadband | Industrial vs. Gold Road Resources |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |