Correlation Between United Utilities and GE Vernova
Can any of the company-specific risk be diversified away by investing in both United Utilities and GE Vernova 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 GE Vernova 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 GE Vernova LLC, you can compare the effects of market volatilities on United Utilities and GE Vernova 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 GE Vernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and GE Vernova.
Diversification Opportunities for United Utilities and GE Vernova
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and GEV is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of United Utilities i.e., United Utilities and GE Vernova go up and down completely randomly.
Pair Corralation between United Utilities and GE Vernova
Assuming the 90 days horizon United Utilities is expected to generate 14.13 times less return on investment than GE Vernova. But when comparing it to its historical volatility, United Utilities Group is 2.9 times less risky than GE Vernova. It trades about 0.05 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 28,901 in GE Vernova LLC on October 26, 2024 and sell it today you would earn a total of 14,870 from holding GE Vernova LLC or generate 51.45% 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. GE Vernova LLC
Performance |
| Timeline |
| United Utilities |
| GE Vernova LLC |
United Utilities and GE Vernova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and GE Vernova
The main advantage of trading using opposite United Utilities and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova'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 |
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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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