Correlation Between United Utilities and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both United Utilities and FTAI Aviation 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 FTAI Aviation 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 FTAI Aviation Ltd, you can compare the effects of market volatilities on United Utilities and FTAI Aviation 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 FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and FTAI Aviation.
Diversification Opportunities for United Utilities and FTAI Aviation
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and FTAI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation 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 FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of United Utilities i.e., United Utilities and FTAI Aviation go up and down completely randomly.
Pair Corralation between United Utilities and FTAI Aviation
Assuming the 90 days horizon United Utilities Group is expected to generate 1.48 times more return on investment than FTAI Aviation. However, United Utilities is 1.48 times more volatile than FTAI Aviation Ltd. It trades about 0.09 of its potential returns per unit of risk. FTAI Aviation Ltd is currently generating about -0.05 per unit of risk. If you would invest 1,355 in United Utilities Group on September 14, 2024 and sell it today you would earn a total of 39.00 from holding United Utilities Group or generate 2.88% 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. FTAI Aviation Ltd
Performance |
| Timeline |
| United Utilities |
| FTAI Aviation |
United Utilities and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and FTAI Aviation
The main advantage of trading using opposite United Utilities and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, FTAI Aviation 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.| United Utilities vs. Artesian Resources | United Utilities vs. Global Water Resources | United Utilities vs. Essential Utilities | United Utilities vs. American Water Works |
| FTAI Aviation vs. Mills Music Trust | FTAI Aviation vs. Warner Music Group | FTAI Aviation vs. Electronic Arts | FTAI Aviation vs. American Airlines Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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