Correlation Between United Utilities and Scientific Games
Can any of the company-specific risk be diversified away by investing in both United Utilities and Scientific Games 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 Scientific Games 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 Scientific Games, you can compare the effects of market volatilities on United Utilities and Scientific Games 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 Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Scientific Games.
Diversification Opportunities for United Utilities and Scientific Games
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Scientific is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of United Utilities i.e., United Utilities and Scientific Games go up and down completely randomly.
Pair Corralation between United Utilities and Scientific Games
Assuming the 90 days trading horizon United Utilities is expected to generate 1.73 times less return on investment than Scientific Games. But when comparing it to its historical volatility, United Utilities Group is 1.28 times less risky than Scientific Games. It trades about 0.04 of its potential returns per unit of risk. Scientific Games is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,000 in Scientific Games on September 5, 2024 and sell it today you would earn a total of 2,900 from holding Scientific Games or generate 48.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Utilities Group vs. Scientific Games
Performance |
| Timeline |
| United Utilities |
| Scientific Games |
United Utilities and Scientific Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Scientific Games
The main advantage of trading using opposite United Utilities and Scientific Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Scientific Games 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 Scientific Games will offset losses from the drop in Scientific Games' long position.| United Utilities vs. Superior Plus Corp | United Utilities vs. NMI Holdings | United Utilities vs. Origin Agritech | United Utilities vs. SIVERS SEMICONDUCTORS AB |
| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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