Correlation Between United Utilities and SILICON LABORATOR
Can any of the company-specific risk be diversified away by investing in both United Utilities and SILICON LABORATOR 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 SILICON LABORATOR 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 SILICON LABORATOR, you can compare the effects of market volatilities on United Utilities and SILICON LABORATOR 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 SILICON LABORATOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and SILICON LABORATOR.
Diversification Opportunities for United Utilities and SILICON LABORATOR
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and SILICON is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and SILICON LABORATOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILICON LABORATOR 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 SILICON LABORATOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILICON LABORATOR has no effect on the direction of United Utilities i.e., United Utilities and SILICON LABORATOR go up and down completely randomly.
Pair Corralation between United Utilities and SILICON LABORATOR
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the SILICON LABORATOR. But the stock apears to be less risky and, when comparing its historical volatility, United Utilities Group is 2.64 times less risky than SILICON LABORATOR. The stock trades about -0.38 of its potential returns per unit of risk. The SILICON LABORATOR is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 10,900 in SILICON LABORATOR on October 10, 2024 and sell it today you would earn a total of 1,600 from holding SILICON LABORATOR or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. SILICON LABORATOR
Performance |
| Timeline |
| United Utilities |
| SILICON LABORATOR |
United Utilities and SILICON LABORATOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and SILICON LABORATOR
The main advantage of trading using opposite United Utilities and SILICON LABORATOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, SILICON LABORATOR 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 SILICON LABORATOR will offset losses from the drop in SILICON LABORATOR's long position.| United Utilities vs. United Natural Foods | United Utilities vs. Ribbon Communications | United Utilities vs. PLANT VEDA FOODS | United Utilities vs. Ebro Foods SA |
| SILICON LABORATOR vs. PLAYMATES TOYS | SILICON LABORATOR vs. Media and Games | SILICON LABORATOR vs. Universal Insurance Holdings | SILICON LABORATOR vs. GAMESTOP |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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