Correlation Between United Utilities and GoldMining | UU.LSE vs. 0UYN.LSE

Correlation Between United Utilities and GoldMining

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Can any of the company-specific risk be diversified away by investing in both United Utilities and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on United Utilities and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and GoldMining.

Diversification Opportunities for United Utilities and GoldMining

UnitedGoldMiningDiversified AwayUnitedGoldMiningDiversified Away100%
-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between United and GoldMining is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of United Utilities i.e., United Utilities and GoldMining go up and down completely randomly.

Pair Corralation between United Utilities and GoldMining

Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.59 times more return on investment than GoldMining. However, United Utilities Group is 1.7 times less risky than GoldMining. It trades about 0.17 of its potential returns per unit of risk. GoldMining is currently generating about -0.07 per unit of risk. If you would invest  103,254  in United Utilities Group on September 14, 2024 and sell it today you would earn a total of  4,946  from holding United Utilities Group or generate 4.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy63.64%
ValuesDaily Returns

United Utilities Group  vs.  GoldMining

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -10-5051015
JavaScript chart by amCharts 3.21.15UU 0UYN
       Timeline  
United Utilities 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in United Utilities Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, United Utilities is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1,0001,0201,0401,0601,0801,1001,1201,140
GoldMining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15AugSepOctNovDecSepOctNovDec1.11.151.21.251.31.351.4

United Utilities and GoldMining Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.16-3.11-2.07-1.030.01.042.113.184.255.32 0.050.100.150.20
JavaScript chart by amCharts 3.21.15UU 0UYN
       Returns  

Pair Trading with United Utilities and GoldMining

The main advantage of trading using opposite United Utilities and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.
The idea behind United Utilities Group and GoldMining 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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