Correlation Between United Utilities and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both United Utilities and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on United Utilities and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Jacquet Metal.
Diversification Opportunities for United Utilities and Jacquet Metal
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Jacquet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of United Utilities i.e., United Utilities and Jacquet Metal go up and down completely randomly.
Pair Corralation between United Utilities and Jacquet Metal
Assuming the 90 days trading horizon United Utilities Group is expected to generate 1.25 times more return on investment than Jacquet Metal. However, United Utilities is 1.25 times more volatile than Jacquet Metal Service. It trades about -0.08 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.14 per unit of risk. If you would invest 1,260 in United Utilities Group on November 7, 2024 and sell it today you would lose (60.00) from holding United Utilities Group or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
United Utilities Group vs. Jacquet Metal Service
Performance |
| Timeline |
| United Utilities |
| Jacquet Metal Service |
United Utilities and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Jacquet Metal
The main advantage of trading using opposite United Utilities and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| United Utilities vs. GALENA MINING LTD | United Utilities vs. GRIFFIN MINING LTD | United Utilities vs. CHIBA BANK | United Utilities vs. Direct Line Insurance |
| Jacquet Metal vs. ArcelorMittal SA | Jacquet Metal vs. Steel Dynamics | Jacquet Metal vs. Nippon Steel | Jacquet Metal vs. NIPPON STEEL SPADR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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