Correlation Between United Utilities and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both United Utilities and SHELF 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 SHELF DRILLING 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 SHELF DRILLING LTD, you can compare the effects of market volatilities on United Utilities and SHELF 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and SHELF DRILLING.
Diversification Opportunities for United Utilities and SHELF DRILLING
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and SHELF is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of United Utilities i.e., United Utilities and SHELF DRILLING go up and down completely randomly.
Pair Corralation between United Utilities and SHELF DRILLING
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.36 times more return on investment than SHELF DRILLING. However, United Utilities Group is 2.79 times less risky than SHELF DRILLING. It trades about 0.07 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.11 per unit of risk. If you would invest 1,171 in United Utilities Group on September 1, 2024 and sell it today you would earn a total of 179.00 from holding United Utilities Group or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. SHELF DRILLING LTD
Performance |
| Timeline |
| United Utilities |
| SHELF DRILLING LTD |
United Utilities and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and SHELF DRILLING
The main advantage of trading using opposite United Utilities and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, SHELF 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.| United Utilities vs. Vastned Retail NV | United Utilities vs. RETAIL FOOD GROUP | United Utilities vs. Caseys General Stores | United Utilities vs. BURLINGTON STORES |
| SHELF DRILLING vs. Daldrup Shne Aktiengesellschaft | SHELF DRILLING vs. Superior Plus Corp | SHELF DRILLING vs. NMI Holdings | SHELF DRILLING vs. Origin Agritech |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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