Correlation Between Zegona Communications and United Utilities
Can any of the company-specific risk be diversified away by investing in both Zegona Communications and United Utilities 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 Zegona Communications and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and United Utilities Group, you can compare the effects of market volatilities on Zegona Communications and United Utilities 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 Zegona Communications with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and United Utilities.
Diversification Opportunities for Zegona Communications and United Utilities
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zegona and United is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Zegona Communications i.e., Zegona Communications and United Utilities go up and down completely randomly.
Pair Corralation between Zegona Communications and United Utilities
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 5.68 times more return on investment than United Utilities. However, Zegona Communications is 5.68 times more volatile than United Utilities Group. It trades about 0.28 of its potential returns per unit of risk. United Utilities Group is currently generating about -0.29 per unit of risk. If you would invest 33,400 in Zegona Communications Plc on October 10, 2024 and sell it today you would earn a total of 9,000 from holding Zegona Communications Plc or generate 26.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. United Utilities Group
Performance |
| Timeline |
| Zegona Communications Plc |
| United Utilities |
Zegona Communications and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and United Utilities
The main advantage of trading using opposite Zegona Communications and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Zegona Communications vs. Bloomsbury Publishing Plc | Zegona Communications vs. Southwest Airlines Co | Zegona Communications vs. BW Offshore | Zegona Communications vs. International Consolidated Airlines |
| United Utilities vs. Fulcrum Metals PLC | United Utilities vs. Ecclesiastical Insurance Office | United Utilities vs. Infrastrutture Wireless Italiane | United Utilities vs. Waste Management |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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