Correlation Between United Utilities and Identiv
Can any of the company-specific risk be diversified away by investing in both United Utilities and Identiv 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 Identiv 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 Identiv, you can compare the effects of market volatilities on United Utilities and Identiv 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 Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Identiv.
Diversification Opportunities for United Utilities and Identiv
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Identiv is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of United Utilities i.e., United Utilities and Identiv go up and down completely randomly.
Pair Corralation between United Utilities and Identiv
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.41 times more return on investment than Identiv. However, United Utilities Group is 2.46 times less risky than Identiv. It trades about 0.01 of its potential returns per unit of risk. Identiv is currently generating about -0.01 per unit of risk. If you would invest 1,145 in United Utilities Group on November 27, 2024 and sell it today you would earn a total of 15.00 from holding United Utilities Group or generate 1.31% 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. Identiv
Performance |
| Timeline |
| United Utilities |
| Identiv |
United Utilities and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Identiv
The main advantage of trading using opposite United Utilities and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.| United Utilities vs. MAG Silver Corp | United Utilities vs. INSURANCE AUST GRP | United Utilities vs. UNIQA INSURANCE GR | United Utilities vs. Aya Gold Silver |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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