Correlation Between Edgewell Personal and UNITED

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Can any of the company-specific risk be diversified away by investing in both Edgewell Personal and UNITED 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 Edgewell Personal and UNITED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewell Personal Care and UNITED TECHNOLOGIES P, you can compare the effects of market volatilities on Edgewell Personal and UNITED 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 Edgewell Personal with a short position of UNITED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewell Personal and UNITED.

Diversification Opportunities for Edgewell Personal and UNITED

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Edgewell and UNITED is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED TECHNOLOGIES and Edgewell Personal 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 Edgewell Personal Care are associated (or correlated) with UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of Edgewell Personal i.e., Edgewell Personal and UNITED go up and down completely randomly.

Pair Corralation between Edgewell Personal and UNITED

Considering the 90-day investment horizon Edgewell Personal Care is expected to generate 0.72 times more return on investment than UNITED. However, Edgewell Personal Care is 1.39 times less risky than UNITED. It trades about -0.02 of its potential returns per unit of risk. UNITED TECHNOLOGIES P is currently generating about -0.02 per unit of risk. If you would invest  3,988  in Edgewell Personal Care on October 11, 2024 and sell it today you would lose (765.00) from holding Edgewell Personal Care or give up 19.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy48.59%
ValuesDaily Returns

Edgewell Personal Care  vs.  UNITED TECHNOLOGIES P

 Performance 
       Timeline  
Edgewell Personal Care 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
UNITED TECHNOLOGIES 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days UNITED TECHNOLOGIES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for UNITED TECHNOLOGIES P investors.

Edgewell Personal and UNITED Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Edgewell Personal and UNITED

The main advantage of trading using opposite Edgewell Personal and UNITED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewell Personal position performs unexpectedly, UNITED 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 will offset losses from the drop in UNITED's long position.
The idea behind Edgewell Personal Care and UNITED TECHNOLOGIES P 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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