Correlation Between United Utilities and Charter Communications
Can any of the company-specific risk be diversified away by investing in both United Utilities and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on United Utilities and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Charter Communications.
Diversification Opportunities for United Utilities and Charter Communications
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Charter is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of United Utilities i.e., United Utilities and Charter Communications go up and down completely randomly.
Pair Corralation between United Utilities and Charter Communications
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.75 times more return on investment than Charter Communications. However, United Utilities Group is 1.33 times less risky than Charter Communications. It trades about 0.02 of its potential returns per unit of risk. Charter Communications is currently generating about 0.01 per unit of risk. If you would invest 1,118 in United Utilities Group on January 8, 2025 and sell it today you would earn a total of 152.00 from holding United Utilities Group or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Utilities Group vs. Charter Communications
Performance |
| Timeline |
| United Utilities |
| Charter Communications |
United Utilities and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Charter Communications
The main advantage of trading using opposite United Utilities and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| United Utilities vs. East Africa Metals | United Utilities vs. MCEWEN MINING INC | United Utilities vs. ADRIATIC METALS LS 013355 | United Utilities vs. Clearside Biomedical |
| Charter Communications vs. The Walt Disney | Charter Communications vs. Netflix | Charter Communications vs. Warner Music Group | Charter Communications vs. ViacomCBS |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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