Correlation Between United Utilities and KLA
Can any of the company-specific risk be diversified away by investing in both United Utilities and KLA 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 KLA 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 KLA Corporation, you can compare the effects of market volatilities on United Utilities and KLA 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 KLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and KLA.
Diversification Opportunities for United Utilities and KLA
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and KLA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation 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 KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of United Utilities i.e., United Utilities and KLA go up and down completely randomly.
Pair Corralation between United Utilities and KLA
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.65 times more return on investment than KLA. However, United Utilities Group is 1.54 times less risky than KLA. It trades about 0.34 of its potential returns per unit of risk. KLA Corporation is currently generating about 0.02 per unit of risk. If you would invest 1,214 in United Utilities Group on September 5, 2024 and sell it today you would earn a total of 146.00 from holding United Utilities Group or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Utilities Group vs. KLA Corp.
Performance |
| Timeline |
| United Utilities |
| KLA Corporation |
United Utilities and KLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and KLA
The main advantage of trading using opposite United Utilities and KLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, KLA 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 KLA will offset losses from the drop in KLA's long position.| United Utilities vs. Superior Plus Corp | United Utilities vs. NMI Holdings | United Utilities vs. Origin Agritech | United Utilities vs. SIVERS SEMICONDUCTORS AB |
| KLA vs. MOLSON RS BEVERAGE | KLA vs. ZURICH INSURANCE GROUP | KLA vs. Algonquin Power Utilities | KLA vs. United Utilities 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |