Correlation Between United Utilities and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both United Utilities and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on United Utilities and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and ESSILORLUXOTTICA.
Diversification Opportunities for United Utilities and ESSILORLUXOTTICA
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and ESSILORLUXOTTICA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of United Utilities i.e., United Utilities and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between United Utilities and ESSILORLUXOTTICA
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the ESSILORLUXOTTICA. In addition to that, United Utilities is 1.03 times more volatile than ESSILORLUXOTTICA 12ON. It trades about -0.36 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.06 per unit of volatility. If you would invest 11,400 in ESSILORLUXOTTICA 12ON on October 7, 2024 and sell it today you would earn a total of 100.00 from holding ESSILORLUXOTTICA 12ON or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| United Utilities |
| ESSILORLUXOTTICA 12ON |
United Utilities and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and ESSILORLUXOTTICA
The main advantage of trading using opposite United Utilities and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA'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 |
| ESSILORLUXOTTICA vs. The Trade Desk | ESSILORLUXOTTICA vs. VIENNA INSURANCE GR | ESSILORLUXOTTICA vs. AUTO TRADER ADR | ESSILORLUXOTTICA vs. ZURICH INSURANCE GROUP |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |