Correlation Between United Utilities and SAMS INTERNAT
Can any of the company-specific risk be diversified away by investing in both United Utilities and SAMS INTERNAT 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 SAMS INTERNAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and SAMS INTERNAT R, you can compare the effects of market volatilities on United Utilities and SAMS INTERNAT 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 SAMS INTERNAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and SAMS INTERNAT.
Diversification Opportunities for United Utilities and SAMS INTERNAT
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and SAMS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and SAMS INTERNAT R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMS INTERNAT R 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 Group are associated (or correlated) with SAMS INTERNAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMS INTERNAT R has no effect on the direction of United Utilities i.e., United Utilities and SAMS INTERNAT go up and down completely randomly.
Pair Corralation between United Utilities and SAMS INTERNAT
Assuming the 90 days trading horizon United Utilities is expected to generate 2.62 times less return on investment than SAMS INTERNAT. But when comparing it to its historical volatility, United Utilities Group is 1.82 times less risky than SAMS INTERNAT. It trades about 0.03 of its potential returns per unit of risk. SAMS INTERNAT R is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 184.00 in SAMS INTERNAT R on October 7, 2024 and sell it today you would earn a total of 88.00 from holding SAMS INTERNAT R or generate 47.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. SAMS INTERNAT R
Performance |
| Timeline |
| United Utilities |
| SAMS INTERNAT R |
United Utilities and SAMS INTERNAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and SAMS INTERNAT
The main advantage of trading using opposite United Utilities and SAMS INTERNAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, SAMS INTERNAT 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 SAMS INTERNAT will offset losses from the drop in SAMS INTERNAT's long position.| United Utilities vs. Boyd Gaming | United Utilities vs. Hochschild Mining plc | United Utilities vs. Northern Data AG | United Utilities vs. Fidelity National Information |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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