Correlation Between United Utilities and Energy Of
Can any of the company-specific risk be diversified away by investing in both United Utilities and Energy Of 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 Energy Of 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 Energy of Minas, you can compare the effects of market volatilities on United Utilities and Energy Of 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 Energy Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Energy Of.
Diversification Opportunities for United Utilities and Energy Of
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Energy is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Energy of Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy of Minas 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 Energy Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy of Minas has no effect on the direction of United Utilities i.e., United Utilities and Energy Of go up and down completely randomly.
Pair Corralation between United Utilities and Energy Of
Assuming the 90 days horizon United Utilities Group is expected to generate 0.6 times more return on investment than Energy Of. However, United Utilities Group is 1.67 times less risky than Energy Of. It trades about 0.04 of its potential returns per unit of risk. Energy of Minas is currently generating about 0.01 per unit of risk. If you would invest 2,398 in United Utilities Group on September 12, 2024 and sell it today you would earn a total of 382.00 from holding United Utilities Group or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Energy of Minas
Performance |
| Timeline |
| United Utilities |
| Energy of Minas |
United Utilities and Energy Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Energy Of
The main advantage of trading using opposite United Utilities and Energy Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, Energy Of 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 Energy Of will offset losses from the drop in Energy Of's long position.| United Utilities vs. American Water Works | United Utilities vs. Middlesex Water | United Utilities vs. SJW Group Common | United Utilities vs. California Water Service |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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