Correlation Between United Utilities and United Internet
Can any of the company-specific risk be diversified away by investing in both United Utilities and United Internet 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 United Internet 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 United Internet AG, you can compare the effects of market volatilities on United Utilities and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and United Internet.
Diversification Opportunities for United Utilities and United Internet
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and United is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of United Utilities i.e., United Utilities and United Internet go up and down completely randomly.
Pair Corralation between United Utilities and United Internet
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the United Internet. In addition to that, United Utilities is 1.34 times more volatile than United Internet AG. It trades about -0.18 of its total potential returns per unit of risk. United Internet AG is currently generating about -0.09 per unit of volatility. If you would invest 1,573 in United Internet AG on October 16, 2024 and sell it today you would lose (71.00) from holding United Internet AG or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. United Internet AG
Performance |
| Timeline |
| United Utilities |
| United Internet AG |
United Utilities and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and United Internet
The main advantage of trading using opposite United Utilities and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| United Utilities vs. NorAm Drilling AS | United Utilities vs. MOVIE GAMES SA | United Utilities vs. VELA TECHNOLPLC LS 0001 | United Utilities vs. Tencent Music Entertainment |
| United Internet vs. De Grey Mining | United Internet vs. Canadian Utilities Limited | United Internet vs. United Utilities Group | United Internet vs. Harmony Gold Mining |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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