Correlation Between United Utilities and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both United Utilities and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY, you can compare the effects of market volatilities on United Utilities and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and BANK HANDLOWY.
Diversification Opportunities for United Utilities and BANK HANDLOWY
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and BANK is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of United Utilities i.e., United Utilities and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between United Utilities and BANK HANDLOWY
Assuming the 90 days trading horizon United Utilities is expected to generate 2.68 times less return on investment than BANK HANDLOWY. But when comparing it to its historical volatility, United Utilities Group is 2.07 times less risky than BANK HANDLOWY. It trades about 0.06 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,074 in BANK HANDLOWY on September 12, 2024 and sell it today you would earn a total of 1,066 from holding BANK HANDLOWY or generate 99.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. BANK HANDLOWY
Performance |
| Timeline |
| United Utilities |
| BANK HANDLOWY |
United Utilities and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and BANK HANDLOWY
The main advantage of trading using opposite United Utilities and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.| United Utilities vs. Sunstone Hotel Investors | United Utilities vs. MIRAMAR HOTEL INV | United Utilities vs. MTI WIRELESS EDGE | United Utilities vs. Infrastrutture Wireless Italiane |
| BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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