Correlation Between United Utilities and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both United Utilities and CarsalesCom 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 CarsalesCom 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 CarsalesCom, you can compare the effects of market volatilities on United Utilities and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and CarsalesCom.
Diversification Opportunities for United Utilities and CarsalesCom
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and CarsalesCom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of United Utilities i.e., United Utilities and CarsalesCom go up and down completely randomly.
Pair Corralation between United Utilities and CarsalesCom
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.94 times more return on investment than CarsalesCom. However, United Utilities Group is 1.06 times less risky than CarsalesCom. It trades about 0.02 of its potential returns per unit of risk. CarsalesCom is currently generating about -0.01 per unit of risk. If you would invest 1,244 in United Utilities Group on September 29, 2024 and sell it today you would earn a total of 16.00 from holding United Utilities Group or generate 1.29% 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. CarsalesCom
Performance |
| Timeline |
| United Utilities |
| CarsalesCom |
United Utilities and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and CarsalesCom
The main advantage of trading using opposite United Utilities and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| United Utilities vs. Samsung Electronics Co | United Utilities vs. CarsalesCom | United Utilities vs. Electronic Arts | United Utilities vs. Lendlease Group |
| CarsalesCom vs. Alphabet | CarsalesCom vs. Meta Platforms | CarsalesCom vs. Meta Platforms | CarsalesCom vs. AIRBNB INC DL 01 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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