Correlation Between UNITED UTILITIES and Moncler SpA

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

Diversification Opportunities for UNITED UTILITIES and Moncler SpA

-0.56

Correlation Coefficient

UNITED UTILITIES  Moncler SpA

Excellent diversification

The 3 months correlation between UNITED and Moncler is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Moncler SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moncler SpA 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 Moncler SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moncler SpA has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Moncler SpA go up and down completely randomly.

Pair Corralation between UNITED UTILITIES and Moncler SpA

Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.78 times more return on investment than Moncler SpA. However, UNITED UTILITIES GR is 1.28 times less risky than Moncler SpA. It trades about 0.05 of its potential returns per unit of risk. Moncler SpA is currently generating about -0.04 per unit of risk. If you would invest  1,145  in UNITED UTILITIES GR on September 29, 2024 and sell it today you would earn a total of  105.00  from holding UNITED UTILITIES GR or generate 9.17% return on investment over 90 days.

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

UNITED UTILITIES GR  vs.  Moncler SpA

UNITED UTILITIES

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED UTILITIES GR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UNITED UTILITIES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Moncler SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moncler SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with UNITED UTILITIES and Moncler SpA

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

The idea behind UNITED UTILITIES GR and Moncler SpA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.