Correlation Between UNITED UTILITIES and PRECISION DRILLING
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and PRECISION DRILLING 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 PRECISION DRILLING 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 PRECISION DRILLING P, you can compare the effects of market volatilities on UNITED UTILITIES and PRECISION DRILLING 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 PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and PRECISION DRILLING.
Diversification Opportunities for UNITED UTILITIES and PRECISION DRILLING
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNITED and PRECISION is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING 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 PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and PRECISION DRILLING go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and PRECISION DRILLING
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.65 times more return on investment than PRECISION DRILLING. However, UNITED UTILITIES GR is 1.53 times less risky than PRECISION DRILLING. It trades about 0.12 of its potential returns per unit of risk. PRECISION DRILLING P is currently generating about -0.08 per unit of risk. If you would invest 1,254 in UNITED UTILITIES GR on September 12, 2024 and sell it today you would earn a total of 46.00 from holding UNITED UTILITIES GR or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. PRECISION DRILLING P
Performance |
| Timeline |
| UNITED UTILITIES |
| PRECISION DRILLING |
UNITED UTILITIES and PRECISION DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and PRECISION DRILLING
The main advantage of trading using opposite UNITED UTILITIES and PRECISION DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, PRECISION DRILLING 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 PRECISION DRILLING will offset losses from the drop in PRECISION DRILLING's long position.| UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc |
| PRECISION DRILLING vs. Nabors Industries | PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |