Correlation Between UNITED UTILITIES and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and SEALED AIR 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 SEALED AIR 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 SEALED AIR , you can compare the effects of market volatilities on UNITED UTILITIES and SEALED AIR 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 SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and SEALED AIR.
Diversification Opportunities for UNITED UTILITIES and SEALED AIR
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and SEALED is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and SEALED AIR go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and SEALED AIR
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the SEALED AIR. But the stock apears to be less risky and, when comparing its historical volatility, UNITED UTILITIES GR is 1.08 times less risky than SEALED AIR. The stock trades about 0.0 of its potential returns per unit of risk. The SEALED AIR is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,318 in SEALED AIR on October 17, 2024 and sell it today you would lose (58.00) from holding SEALED AIR or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. SEALED AIR
Performance |
| Timeline |
| UNITED UTILITIES |
| SEALED AIR |
UNITED UTILITIES and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and SEALED AIR
The main advantage of trading using opposite UNITED UTILITIES and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, SEALED AIR 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 SEALED AIR will offset losses from the drop in SEALED AIR's long position.| UNITED UTILITIES vs. Methode Electronics | UNITED UTILITIES vs. Altair Engineering | UNITED UTILITIES vs. Arrow Electronics | UNITED UTILITIES vs. Corsair Gaming |
| SEALED AIR vs. THAI BEVERAGE | SEALED AIR vs. China Resources Beer | SEALED AIR vs. Canadian Utilities Limited | SEALED AIR vs. UNITED UTILITIES GR |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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