Correlation Between Grupo Carso and UNITED UTILITIES

Can any of the company-specific risk be diversified away by investing in both Grupo Carso 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 Grupo Carso and UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Carso SAB and UNITED UTILITIES GR, you can compare the effects of market volatilities on Grupo Carso 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 Grupo Carso with a short position of UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and UNITED UTILITIES.

Diversification Opportunities for Grupo Carso and UNITED UTILITIES

0.1

Correlation Coefficient

Grupo Carso  UNITED UTILITIES

Average diversification

The 3 months correlation between Grupo and UNITED is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES and Grupo Carso 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 Grupo Carso SAB 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 Grupo Carso i.e., Grupo Carso and UNITED UTILITIES go up and down completely randomly.

Pair Corralation between Grupo Carso and UNITED UTILITIES

Assuming the 90 days horizon Grupo Carso SAB is expected to under-perform the UNITED UTILITIES. In addition to that, Grupo Carso is 2.15 times more volatile than UNITED UTILITIES GR. It trades about -0.02 of its total potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.03 per unit of volatility. If you would invest  1,174  in UNITED UTILITIES GR on September 13, 2024 and sell it today you would earn a total of  126.00  from holding UNITED UTILITIES GR or generate 10.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Carso SAB  vs.  UNITED UTILITIES GR

Grupo Carso SAB

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UNITED UTILITIES

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED UTILITIES GR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UNITED UTILITIES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Carso and UNITED UTILITIES

The main advantage of trading using opposite Grupo Carso and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso 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's long position.

The idea behind Grupo Carso SAB and UNITED UTILITIES GR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.