Correlation Between United Utilities and Corporate Office
Can any of the company-specific risk be diversified away by investing in both United Utilities and Corporate Office 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 Corporate Office 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 Corporate Office Properties, you can compare the effects of market volatilities on United Utilities and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Corporate Office.
Diversification Opportunities for United Utilities and Corporate Office
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Corporate is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of United Utilities i.e., United Utilities and Corporate Office go up and down completely randomly.
Pair Corralation between United Utilities and Corporate Office
Assuming the 90 days trading horizon United Utilities Group is expected to generate 1.02 times more return on investment than Corporate Office. However, United Utilities is 1.02 times more volatile than Corporate Office Properties. It trades about 0.16 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.09 per unit of risk. If you would invest 1,244 in United Utilities Group on September 12, 2024 and sell it today you would earn a total of 66.00 from holding United Utilities Group or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Corporate Office Properties
Performance |
| Timeline |
| United Utilities |
| Corporate Office Pro |
United Utilities and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Corporate Office
The main advantage of trading using opposite United Utilities and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| United Utilities vs. Sunstone Hotel Investors | United Utilities vs. MIRAMAR HOTEL INV | United Utilities vs. MTI WIRELESS EDGE | United Utilities vs. Infrastrutture Wireless Italiane |
| Corporate Office vs. ORIX JREIT INC | Corporate Office vs. Superior Plus Corp | Corporate Office vs. SIVERS SEMICONDUCTORS AB | Corporate Office vs. Norsk Hydro ASA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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