Correlation Between United Utilities and Dolby Laboratories
Can any of the company-specific risk be diversified away by investing in both United Utilities and Dolby Laboratories 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 Dolby Laboratories 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 Dolby Laboratories, you can compare the effects of market volatilities on United Utilities and Dolby Laboratories 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 Dolby Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Dolby Laboratories.
Diversification Opportunities for United Utilities and Dolby Laboratories
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Dolby is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Dolby Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolby Laboratories 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 Dolby Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolby Laboratories has no effect on the direction of United Utilities i.e., United Utilities and Dolby Laboratories go up and down completely randomly.
Pair Corralation between United Utilities and Dolby Laboratories
Assuming the 90 days trading horizon United Utilities Group is expected to generate 1.09 times more return on investment than Dolby Laboratories. However, United Utilities is 1.09 times more volatile than Dolby Laboratories. It trades about 0.04 of its potential returns per unit of risk. Dolby Laboratories is currently generating about 0.03 per unit of risk. If you would invest 1,044 in United Utilities Group on September 12, 2024 and sell it today you would earn a total of 266.00 from holding United Utilities Group or generate 25.48% 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. Dolby Laboratories
Performance |
| Timeline |
| United Utilities |
| Dolby Laboratories |
United Utilities and Dolby Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Dolby Laboratories
The main advantage of trading using opposite United Utilities and Dolby Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Dolby Laboratories 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 Dolby Laboratories will offset losses from the drop in Dolby Laboratories' long position.| United Utilities vs. Sunstone Hotel Investors | United Utilities vs. MIRAMAR HOTEL INV | United Utilities vs. MTI WIRELESS EDGE | United Utilities vs. Infrastrutture Wireless Italiane |
| Dolby Laboratories vs. Live Nation Entertainment | Dolby Laboratories vs. Toho Co | Dolby Laboratories vs. Superior Plus Corp | Dolby Laboratories vs. NMI Holdings |
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.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |