Correlation Between UNITED UTILITIES and Brockhaus Capital

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

By analyzing existing cross correlation between UNITED UTILITIES GR and Brockhaus Capital Management, you can compare the effects of market volatilities on UNITED UTILITIES and Brockhaus Capital 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 Brockhaus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Brockhaus Capital.

Diversification Opportunities for UNITED UTILITIES and Brockhaus Capital

-0.17

Correlation Coefficient

UNITED UTILITIES  Brockhaus Capital

Good diversification

The 3 months correlation between UNITED and Brockhaus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital 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 GR are associated (or correlated) with Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Brockhaus Capital go up and down completely randomly.

Pair Corralation between UNITED UTILITIES and Brockhaus Capital

Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.62 times more return on investment than Brockhaus Capital. However, UNITED UTILITIES GR is 1.62 times less risky than Brockhaus Capital. It trades about -0.08 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about -0.11 per unit of risk. If you would invest  1,264  in UNITED UTILITIES GR on October 22, 2024 and sell it today you would lose (94.00) from holding UNITED UTILITIES GR or give up 7.44% of portfolio value over 90 days.

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

UNITED UTILITIES GR  vs.  Brockhaus Capital Management

UNITED UTILITIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED UTILITIES GR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with UNITED UTILITIES and Brockhaus Capital

The main advantage of trading using opposite UNITED UTILITIES and Brockhaus Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Brockhaus Capital 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 Brockhaus Capital will offset losses from the drop in Brockhaus Capital's long position.

The idea behind UNITED UTILITIES GR and Brockhaus Capital Management 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.