Correlation Between United Utilities and EIDESVIK OFFSHORE
Can any of the company-specific risk be diversified away by investing in both United Utilities and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK, you can compare the effects of market volatilities on United Utilities and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and EIDESVIK OFFSHORE.
Diversification Opportunities for United Utilities and EIDESVIK OFFSHORE
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and EIDESVIK is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIDESVIK OFFSHORE has no effect on the direction of United Utilities i.e., United Utilities and EIDESVIK OFFSHORE go up and down completely randomly.
Pair Corralation between United Utilities and EIDESVIK OFFSHORE
Assuming the 90 days trading horizon United Utilities Group is expected to generate 1.05 times more return on investment than EIDESVIK OFFSHORE. However, United Utilities is 1.05 times more volatile than EIDESVIK OFFSHORE NK. It trades about 0.16 of its potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about 0.12 per unit of risk. If you would invest 1,260 in United Utilities Group on August 26, 2024 and sell it today you would earn a total of 70.00 from holding United Utilities Group or generate 5.56% 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. EIDESVIK OFFSHORE NK
Performance |
| Timeline |
| United Utilities |
| EIDESVIK OFFSHORE |
United Utilities and EIDESVIK OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and EIDESVIK OFFSHORE
The main advantage of trading using opposite United Utilities and EIDESVIK OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE will offset losses from the drop in EIDESVIK OFFSHORE's long position.| United Utilities vs. PLAY2CHILL SA ZY | United Utilities vs. JD SPORTS FASH | United Utilities vs. NorAm Drilling AS | United Utilities vs. LG Display Co |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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