Correlation Between United Utilities and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both United Utilities and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on United Utilities and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Plastic Omnium.
Diversification Opportunities for United Utilities and Plastic Omnium
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Plastic is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of United Utilities i.e., United Utilities and Plastic Omnium go up and down completely randomly.
Pair Corralation between United Utilities and Plastic Omnium
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the Plastic Omnium. But the stock apears to be less risky and, when comparing its historical volatility, United Utilities Group is 1.0 times less risky than Plastic Omnium. The stock trades about -0.33 of its potential returns per unit of risk. The Plastic Omnium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,011 in Plastic Omnium on October 14, 2024 and sell it today you would earn a total of 16.00 from holding Plastic Omnium or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Plastic Omnium
Performance |
| Timeline |
| United Utilities |
| Plastic Omnium |
United Utilities and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Plastic Omnium
The main advantage of trading using opposite United Utilities and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| United Utilities vs. Dentsply Sirona | United Utilities vs. TOMBADOR IRON LTD | United Utilities vs. STEEL DYNAMICS | United Utilities vs. DENTSPLY SIRONA |
| Plastic Omnium vs. Playa Hotels Resorts | Plastic Omnium vs. USWE SPORTS AB | Plastic Omnium vs. United Utilities Group | Plastic Omnium vs. PLAYTIKA HOLDING DL 01 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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